The National Taxpayer Advocate Erin M. Collins issued the required annual report to Congress detailing the past filing season and making recommendations for future legislation (IR-2022-11; https://www.taxpayeradvocate.irs.gov/reports/2021-annual-report-to-congress/). She said “There is no way to sugarcoat the year 2021 in tax administration. From the perspective of tens of millions of taxpayers, tax administration did not work for them.”
As of late December, the IRS had backlogs of 6 million unprocessed original individual returns, 2.3 million unprocessed amended individual returns, more than 2 million unprocessed employer’s quarterly tax returns, and about 5 million pieces of taxpayer correspondence – with some of these submissions dating back at least to April 2021 and many taxpayers still waiting for their refunds nine months later.
The National Taxpayer Advocate 2022 Purple Book within the annual report, which is a compilation of legislative recommendations to strengthen taxpayer rights and improve tax administration, contained the following (this is a partial list of recommendations):
The difference between face value of a bond and lower market price, attributable to rising interest rates. On a sale, gain on the bond is generally taxed as ordinary income to the extent of the discount.