A coalition of 11 tax community stakeholder groups is urging the IRS to take steps to reduce unnecessary burdens for taxpayers and practitioners during the upcoming filing season. IRS staff is currently processing a request for a meeting so that the practitioner groups can develop their recommendations and respond directly to any questions the IRS may have.
The group includes those who represent Latinos, black people, small businesses and low-income taxpayers. In addition to the American Institute of CPAs, the group includes Latino Tax Pro, National Association of Black Accountants, National Association of Enrolled Agents, National Association of Tax Professionals, National Conference of CPA Practitioners, National Society of Accountants , the National Society of Black CPAs, the National Society of Tax Professionals, Padgett Business Services and Prosperity Now.
In a letter, the coalition urges the IRS to address the situation facing practitioners and taxpayers in the upcoming filing season.
“Currently, the IRS still has an unprecedented number of unprocessed returns compared to the years before the pandemic,” they said in the letter. “As a result, the IRS sends out many misdirected notices, liens, and levies. Additionally, the IRS only answers 9% of all calls and only 3% of calls regarding personal tax returns, which prevents taxpayers from solving these simple problems.
To reduce the need for taxpayers and tax practitioners to contact the IRS due to persistent and erroneous notices, the coalition recommends that the Treasury and the IRS:
- Cease automated compliance actions until the IRS is ready to devote the necessary resources to an appropriate and timely resolution of the issue.
- Align account hold requests with the time it takes for the IRS to process any request for penalty reduction.
- Provide a reasonable cause penalty waiver, similar to first reduction proceedings, or FTA, administrative waivers, without affecting the taxpayer’s eligibility for the FTA in future tax years.
- Provide taxpayers with targeted relief from both underpayment of the estimated tax penalty and late payment penalty for the 2020 and 2021 tax years.
The letter noted that the COVID-19 pandemic has created enormous challenges for taxpayers, tax practitioners and the IRS: “It is time to take action to improve the situation. Implementing reasonable penalty relief measures, which the IRS can provide immediately, is necessary to help not only taxpayers and tax practitioners, but also the IRS in these difficult times.
“The problems are highlighted by the fact that the IRS sends notices to taxpayers who have paid and in fact their payment has been offset,” noted Stephen Mankowski, president of tax at NCCPAP, one of the members of the coalition. “There are so many cases where people have answered but are getting automated letters imposing real levies and liens against people, and if they try to call they can never get through. The IRS is so behind they can’t fix all the problems.
Much of this stems from the fact that the IRS is absolutely underfunded, Mankowski observed: “We support giving the IRS adequate funding.”
Roger Harris, president of Padgett Business Services, another coalition member, agreed. “The underfunding of the IRS is a reality. The pandemic has made a bad problem worse,” he said.
It’s been suggested that a moratorium on sentencing would help repeat offenders, but it’s inevitable, according to Harris: “Any time sentences are reduced, it’s possible that some bad actors will take advantage.” But is that reason enough not to grant it to the majority trying to play by the rules?
“It’s really about fairness,” he said. “Taxpayers are being asked to respond in a timely manner and yet the service is not responding in the same manner in a timely manner. Taxpayers and practitioners should not be required to meet the pre-pandemic standard until the IRS can operate in the same way. If I get a letter I have to respond to within 30 days and I’m racking my brains to respond in time, why is the service taking forever, and I can call and not get a response – why is this just my problem? Let’s recognize that these are not normal times and that we all need breaks. »