Taxpayers often have radically different opinions of the Internal Revenue Service than tax professionals — which offers practitioners some opportunities.
The taxpayers you work with may not talk about the Internal Revenue Service much, but look at it this way: If they didn’t have some kind of feeling about the IRS, you’d probably never meet them.
“My clients both don’t like the IRS and are afraid of the IRS. I don’t find either attitude particularly helpful,” said Amber Gray-Fenner, an Enrolled Agent and president at The Gray Agency in Albuquerque, N.M.
“Clients still feel the IRS has no compassion. This is caused in a lot of cases by the computer letters, which are cold and [formal],” said Lawrence Walkden, an EA at Snohomish and Monroe Accounting & Tax, in Monroe, Wash.
“Clients dislike the IRS and believe the president is the culprit of all the tax laws,” said San Antonio EA James Berardi.
“What my clients are saying about the IRS is largely unprintable,” said John Stancil, a CPA in Lakeland, Fla. “They’re fed up with how unresponsive the agency is, especially in situations where they get a notice, submit a response and then get another notice with no acknowledgement that the response was received.”
Kimberely Bates, an EA in Minneola, Fla., and Money Coach founder, specializes in tax controversy, “so the majority of my clients have negative feelings about the IRS,” she said. “Mostly they feel petrified and that it’s too difficult to work out affordable resolutions to settle their debts.”
“My clients are saying that the IRS, like most all federal governing agencies, is both dysfunctional and riddled with some really bad employees incapable of regularly and consistently performing their job descriptions,” said EA John Dundon of Taxpayer Advocacy Services in Englewood, Colo. “I’m saying that the agency’s budget has been both gutted and neglected for far too long, resulting in poor privacy protections for taxpayers and rampant internal abuses of power.”
Some taxpayers just treat “IRS” the way Harry Potter characters treat “Voldemort.”
“My clients do not speak about the IRS. They tend to have limited contact, and when they do they usually refer the items to me to handle,” said Morris Armstrong, an EA and registered investment advisor at Armstrong Financial Strategies in Danbury, Conn.
Some preparers have a lot to say, too. The IRS has fired (or early retired) more than 75 percent of their audit and appeals staff, “and the remaining IRS employees are angry and overworked,” said Alfred Giovetti, a CPA in Catonsville, Md.
Better than zombies?
“These auditors in some places are taking their frustration out on the few taxpayers who are caught in the IRS audit meat grinder,” Giovetti added. “Questions are suppressed, appointments seem to be only made in the two weeks prior to filing deadlines, [and] audit interviews are full of errors and inaccuracies. The most experienced and well-trained IRS employees are leaving, taking early retirement in lieu of being fired. Many of those who remain have never been adequately trained.”
The IRS is the lowest-rated federal agency included in a recent Pew Research Center survey of public opinion of such organizations. Overall, 45 percent of respondents held a favorable view of the IRS; 48 percent said that their view was unfavorable. Republicans, by about two-to-one (64 percent to 30 percent) have an unfavorable opinion of the IRS. Democrats, by about the same margin (62 percent to 32 percent) view it favorably.
Yet a recent Nerdwallet survey revealed that only 11 percent of respondents feared getting audited (public speaking came in at 28 percent and fear of zombies at 8.5 percent).
The type of complaint or attitude depends on the generation of the client, according to Kerry Freeman, an EA at Freeman Income Tax Service, in Anthem, Ariz. “Baby Boomers are fearful and are often more compliant with wanting to pay what they have to and not make any waves,” Freeman said, “while Gen Xers have no trust of the IRS and are often using DIY tax programs and fudge a little more with the attitude that they don’t need their money. The Millennials are just coming into the tax industry and are confused by the complexity of the tax systems [and have] heavy criticism on where and how the tax dollars are spent.”
“I think many of them are buying into what Congress is feeding them,” said EA Terri Ryman, at Southwest Tax & Accounting, in Elkhart, Kansas. “They think the IRS is incompetent and can’t get the job done. And most of them don’t realize that in order to do their job correctly (and bring in the money necessary to run the country), the IRS must have its budget increased.”
Fewer and fewer audits, Ryman added, means “that many folks feel it’s OK to exaggerate their expenses, minimize their income and so on, because the odds of being audited are so low. I spend a lot of time explaining that they must give me the correct numbers.”
“The real issue is that all the criticism is pointed to the IRS,” Freeman said, “and not Congress, who makes the tax laws. I also hear that the IRS is too political, as seen by the entire Tea Party issues that came to light. But I am still wondering ‘political’ for what party, when both point to the IRS as unfair to their party?”
The ‘muddy waters’
Most preparers realize that clients’ negativity about the IRS translates into more tasks – and presumably revenue – for prep services.
For example, what are the clients of Port St. Lucie, Fla., EA Jeffrey Schneider saying about the IRS? “Nothing,” he said. “They use me as a buffer and expect me to be able to swim through the muddy waters.”
“I tell my clients that any correspondence they receive from the IRS needs to be brought to my attention immediately so that I can review and respond,” said Amherst, N.Y., EA Jeff Gentner. “I tell my clients that the IRS, although they are the enforcer of our tax regulations, occasionally misinterprets something on [a] return or needs further clarification.”
“Clients who try to deal with the IRS without my representation,” Gentner said, “complain about long wait times on the phone and not being able to reach the person who can resolve their problem, even those which are relatively simple.”
“All of my clients are aware that the IRS does not contact people via e-mail, does not arrest people out of the blue and definitely does not accept payment in iTunes cards. That,” Armstrong added, “is a result of my continual outreach to my clients throughout the year.”
“When my clients talk about the IRS, they’re still intimidated by the … image,” said Debra James, an EA at Genesis Accounting & Management Services, in Lorain, Ohio. “They also think that whatever the IRS says, such as in a CP2000 letter, they’re right … I assure my clients that if they’re honest and keep good records, getting a letter from IRS is no reason to go into panic mode.
“The IRS, for the most part, wants to work with us, professionals and taxpayers alike, to get the job done,” James added.
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