[IMGCAP(1)]IRS budget woes are the top priorities for Andy Mattson, recently appointed AICPA committee chair of the IRS Advocacy & Relations Committee.
The IRS Advocacy & Relations Committee’s role is to monitor legislative and regulatory changes and suggest improvements to IRS tax forms, publications and educational materials.
“The IRS does not have enough money to function,” said Mattson, tax partner in the Silicon Valley office of Moss Adams. “It affects our ability as CPAs to do our job. Essentially we really have to rely on phone calls to obtain information for our clients from the IRS. In order to respond to notices and get information we need to speak to a human being.”
“They just don’t have enough,” he said. “After an hour and a half of waiting on the phone, you get a ‘courtesy’ disconnect.”
Mattson noted that legislative objectives of cutting taxes and reducing the deficit can only be achieved when the IRS operates at high efficiency. “The more money they get, the more money they collect,” he said. “What we see is the taxpayers that are well-represented with attorneys and CPAs tend to be the parties that benefit when IRS resources are cut. On a more fundamental level, the IRS doesn’t have enough money to fund its necessary functions.”
“They’ve lost about half of their agents in the Bay Area,” he said. “We’re involved in an audit that’s being done out of Colorado because of the lack of local resources. The agents there are not used to how tech companies work. It’s a very challenging process.”
[IMGCAP(2)]Overall, the LB&I Division (Large Business and International Division, formerly the Large and Midsize Business Division) has gone from 7,000 to 5,000 employees in the last five years, according to Mattson. And a number of the current employees at LB&I are likely new hires from the Small Business/Self-Employed Division without the necessary training, he indicated. “They’re not trained the way they should be, because there’s not enough money to pay for their training,” he said. “The system is moving in the direction of falling apart.”
“We want to work with the leadership of the IRS to make sure they are aware of areas where they can improve,” he said. With the reduction in the number of employees at LB&I Division, “the agents we’re seeing really aren’t following the procedures they’re supposed to be following. This is happening all over the U.S. based on talks I’ve had with practitioners.”
“There’s a larger demographic issue, in terms of the aging of the workforce,” he said. “Morale is low and a lot of employees want to leave. It’s a real problem and we get affected by it. To the extent that I can, I will try to influence the AICPA to push for more funding for the IRS.”
On the international side, Mattson believes that BEPS (the Base Erosion and Profit Shifting Project of the Organization for Economic Cooperation and Development) will substantially affect companies doing business abroad.
“It will force companies with international operations, and particularly high-tech companies, to put substance into offshore companies,” he said. “Before, it was possible to migrate to a jurisdiction and lower a company’s taxes that way. That will no longer be possible. The overseas company will have to have substance—boots on the ground.”
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