A Consortium of Tax Professionals is Working to Improve IRS Service

It’s tax time, and the AICPA is part of an alliance pushing the IRS to simplify the process of filing taxes. Melanie Lauridsen, AICPA’s senior manager for Tax Policy and Advocacy, discusses the coalition’s ideas for improving IRS service in this episode.

A look at recent press coverage on IRS service issues and the IRS’s decision to abandon face recognition.

This episode will teach you:

  • Why the Tax Professionals United for Taxpayer Relief Coalition was created by the AICPA and other organisations.
  • A look at some of the IRS service concerns that are hurting individuals and their financial advisors.
  • As a group, we’ve offered four suggestions to the Internal Revenue Service (IRS).
  • The IRS’s announcement on the suspension of automated notices made headlines recently.
  • JofA’s recent coverage of an IRS announcement on facial-recognition technology for taxpayers.

Listen to or read the edited transcript of the episode below:

Transcript:

In the words of Neil Amato: Your host is Neil Amato, and you are now listening to the Journal of Accountancy podcast. One area the programme has touched on lately is taxpayer-related IRS service concerns. Melanie Lauridsen, the AICPA’s senior manager for Tax Policy & Advocacy, will join me to discuss these and other concerns, as well as tips for an easier tax season. It is a member of a group of organisations that are working to alleviate tax burdens. Let me begin by asking Melanie about the coalition and its origins.

Melanie Lauridsen (voice): Neil, thank you. My interest in the coalition is piqued. The American Institute of Certified Public Accountants (AICPA) has long advocated for relief for people and their financial advisors from IRS difficulties. We’ve been calling for relief for taxpayers for over two years now, and we’ve been pressing for more than 18 months.

Taxpayers have gotten a little respite from the IRS, but it hasn’t been enough. Not only for the AICPA but for the whole nation and all of its many organisations, this phenomenon is taking place. When the AICPA chose to lead a coalition, all of these other stakeholders who were suffering the same pain as we were came out to us. There was no hesitation on their side when we invited them to join our alliance. Everything simply fell into place without a hitch. Everyone wants to see some form of alleviation or reduction or resolution to all of the challenges that taxpayers and their advisors are facing.

Amato: Several suggestions have been presented by the Tax Professionals United for Taxpayer Relief Coalition. The following is a list of them:

Lauridsen: To begin, I’d want to point out that the IRS has made four suggestions, all of which may be implemented for the benefit of all taxpayers. Automated compliance activities should be the first thing to be phased out. In essence, we’re discussing the erroneous notifications that individuals are receiving. A single notification is being given. People are attempting to contact the IRS, but they are unable to do so. These notifications suddenly turn into liens and levies. When it could have been resolved quickly, the automatic collecting actions would be a significant benefit.

The second proposal we have is to synchronize the time it takes for the IRS to complete any penalty abatement request with the time it takes for account holds to be requested. What we’re saying or what we’ve learned from our members is that if someone is able to get through to the IRS and informs them that they’ve requested a penalty abatement, they may ask for an account holder.

We’ve heard that the IRS will respect an account hold for three weeks, four weeks, or even up to eight weeks. Because it’s taking 16 weeks or more to be fixed, we have to keep calling the IRS to attempt to have the problem resolved and to obtain a second account hold on our account. Since the IRS only answers around 3% of the calls, this is very tough.

A reasonable-cause penalty waiver comparable to the first-time abatement procedures is our third proposal. The IRS will waive a taxpayer’s penalty if they have been in good standing for the previous three years and request a first-time abatement, in case you were unaware. It’s just a brief phone call to the IRS that’s required; no supporting documentation is required. Well, and fast is a subjective matter. As long as you’re able to get in touch with the IRS.

The reasonable cause has the drawback of requiring a formal letter of explanation. When the IRS is dealing with millions of letters and processing delays because of COVID-19, it’s ludicrous to be able to submit anything through mail. Our request is for a more efficient and quicker process for obtaining reasonable cause.

There are a few factors that need to be taken into consideration. First-time abatement isn’t always available to everyone. Not all taxpayers are eligible for the deduction. The second reason is that some individuals have already taken advantage of it. Then COVID-19 appears, and we’re all aware that it has an effect on everyone. So, what do they do? We’re asking for a shortened procedure since they’re locked in this circumstance for good reason.

Last but not least, the 2021 tax year’s underpayment-of-estimated-tax penalties and late-payment penalties are to be given targeted relief. The IRS’ issues will not be solved by any of these ideas. The difficulty will be alleviated, though.

Another thing I’ve heard is that the fines aren’t always substantial. Yes, I understand, but the issue is that millions of individuals are attempting to contact the IRS every day, regardless of how little or huge their requests are. With these suggestions, we want to reduce the frequency with which taxpayers must contact the Internal Revenue Service. Theoretically, the IRS will be better equipped to assist taxpayers with various sorts of issues if we make fewer calls to them.

Amato: On Monday, February 7th, we’ll be taping our show. Obviously, this is a hot topic, with stories about it appearing almost daily, but how have people responded to the suggestions made?

Lauridsen: I appreciate you pointing out how quickly things are going. Fast-paced activity is taking place in this region. In response to the coalition, and I should add the coalition had a media briefing, as well as submitting a comment letter, as well as having other interactions, this is the first reaction. Similarly, we’ve approved letters from Congress with the same suggestions. The IRS did, in fact, reply.

It was the first thing that they said that they would do. The CP80 notifications, on the other hand, are only for those who have already submitted a tax return. The IRS credited that account for the money they sent in, but they haven’t processed the return yet. However, based on feedback from our members, it seems that the CP80 isn’t the primary cause of the slew of incorrect alerts and attempts to contact the IRS. We appreciate it, but it’s just a minor part of the larger issue.

As a result, the IRS said that it would require legislative approval to halt all collection efforts. However, our advice is not to suspend all collecting efforts, and we mean that in the strictest sense of the word. Another component has been added. The true proposal is to temporarily halt automatic collection notifications, and that’s the most important part. It’s for those notifications that come in the form of auto-replies. As a result of the backlog, the IRS has just stated that they would rearrange around 1,200 of its staff. Again, we thank you for your assistance, but the backlog is enormous, and we are in desperate need of additional volunteers.

Amato: The Journal of Accountancy has published articles on this and other themes related to the backlog, which is clearly ever-evolving. For Melanie’s sake, I’d want to know what’s next in this vein.

Lauridsen: We’re attempting a wide range of endeavors. The group requested a meeting with the Internal Revenue Service, but it was denied. However, no word from them has come as of yet. On the 8th of February, we’re hosting a meeting for all of the coalition’s members. A hearing before the Senate Finance Committee is expected in the middle of February, according to reports. That’s something we’ll keep an eye on and provide assistance for if we can at that hearing. We’re also running media and public efforts to persuade the IRS to take action and, hopefully, provide taxpayers and their advisors with the relief they so desperately need.

Amato: There are obviously a lot of moving components here. Melanie, thank you for taking the time to provide us with an update.

Lauridsen: Neil, many thanks for your kind words.

Amato: That was Melanie Lauridsen from the AICPA, yet again. Thank you. Journalofaccountancy.com and this podcast will continue to provide coverage of any new developments in this area. In reality, the coalition forum she was referring to has been covered by the media. It’s not uncommon for people to spend hours on wait attempting to get through to the IRS, as Paul Bonner’s piece reveals. The program notes for this episode will provide a link to that article.

Following the recording of the discussion, the IRS also said on Wednesday that it will delay the distribution of some automated mailings to taxpayers, including collection letters and notifications of the balance outstanding.

Prior to this announcement, the IRS said it would no longer compel taxpayers to utilise a nonprofit facial-recognition service to verify their identities when using certain web services. However, the IRS had originally planned to make the new account creation and sign-in procedure required as of the end of the summer. Some IRS transactions currently employ this authentication mechanism, and taxpayers may choose to use it when setting up or logging in to an online account.

This concludes the episode. The articles cited in the episode will all have links included in the show notes. The Journal of Accountancy podcast would like to thank you for listening.

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