WASHINGTON – Sen. Chuck Grassley (R-Iowa) and his Republican colleagues on the Senate Finance Committee are again demanding answers from the Internal Revenue Service (IRS) on its 2021 decision to destroy 30 million unprocessed tax returns. 

The lawmakers’ latest push follows reports the move has directly impacted taxpayers, some of whom have been incorrectly denied their earned income tax credit (EITC) claims. This is despite a statement from the IRS that read, “There were no negative taxpayer consequences as a result of this action.” Further, in an insufficient response to the senators’ initial inquiry, the agency maintained it would provide “relief” to taxpayers “whenever appropriate.” 

Grassley and his colleagues, led by Ranking Member Mike Crapo (R-Idaho), yesterday wrote:

“It appears that ‘relief’ was not provided by the IRS to at least some, and potentially thousands of, taxpayers who claimed the EITC in 2019; the destruction of these unprocessed information returns was unnecessary and its direct and indirect harm is disproportionate to whatever storage costs the IRS would have incurred; to date, the IRS is systemically denying/challenging EITC claims that rely upon income reported by these destroyed information returns rather than evaluating documentation in each case; and the IRS has not responded to diverse substantive issues arising from this episode.”

In addition to answers to several of their previous questions, the senators are asking the IRS for information on how its document destruction has affected taxpayers – particularly low-income taxpayers who claimed the EITC.

Read the full letter HERE. 

Background:

According to the Treasury Inspector General for Tax Administration, in March 2021, the IRS intentionally destroyed 30 million unprocessed tax returns due to backlogs. Recent news suggests this likely led to ramifications like the unwarranted, onerous examination of many hardworking taxpayers and denial of tax benefits they are entitled to, in some cases for multiple years. Future changes to IRS enforcement efforts would not help these individuals.

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