The American Institute of CPAs has written a letter to IRS Commissioner Douglas Shulman urging more flexibility in implementing mandatory electronic filing of tax returns by tax preparers in 2011 for individuals, trusts and estates.

Patricia A. Thompson, who chairs the AICPA’s Tax Executive Committee, noted in the letter that the Internal Revenue Service may be unable to issue final guidance for mandatory e-filing of these returns until sometime after the filing season begins. The AICPA recommended that the IRS raise the threshold for mandatory e-filing by tax preparers from the proposed 100 or more returns to 200 or more returns for 2011. 

The AICPA said it supports the three-year phase-in recommended by the IRS’s Electronic Tax Administration Advisory Committee in the panel’s 2010 Annual Report to Congress. The IRS has proposed a two-year phase-in, with the statutory e-file mandate threshold of 11 or more returns being effective in 2012.

To reduce the burden on taxpayers, the AICPA suggested changes to the proposed regulations governing waivers for undue hardship and client opt-outs. For example, the AICPA said requiring taxpayers who opt out of having their returns e-filed by the tax preparer to mail their own paper returns would be burdensome, especially for some elderly or disabled taxpayers.

“We believe there are circumstances where some taxpayers who choose to file a paper return will find it difficult to meet their filing obligations unless the tax return preparer mails the return for them,” wrote Thompson. “In many cases, having the tax return preparer mail the paper return for the client who opts out of e-filing provides more certainty that the return will be delivered timely to the IRS, as opposed to the taxpayer inadvertently misplacing or forgetting to mail the return.”

Finally, the AICPA urged the IRS to allow 10 days, instead of five days, for correcting errors with returns that are not initially accepted by the system because of technological issues. The AICPA noted that when the IRS implemented mandatory e-filing for corporate returns, 20 days were allowed to make corrections, and the IRS has since reduced the number of days to 10 for corporate returns.

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