The federal appropriations bill recently passed by Congress included an attempt to establish some priorities and directives for the Internal Revenue Service – and they’re receiving mixed reviews from tax professionals.
“Customer service at the IRS is very weak right now,” noted Enrolled Agent Twila Midwood of Advanced Tax Centre in Rockledge, Fla. “Newer employees aren’t necessarily receiving proper training in customer service.”
“Congress needs to set their priorities straight: Whether it’s gun control or the IRS, they seem to target the wrong things,” said Morris Armstrong, an EA and registered investment advisor with Armstrong Financial Strategies, in Cheshire, Conn. “The IRS is the collection agency of the United States – and they do a pretty good job.”
The appropriations bill includes some $11 billion to help fund the Tax Counseling for the Elderly Program, Low-Income Taxpayer Clinics, Volunteer Income Tax Assistance and the Taxpayer Advocate Service. (See "Budget deal sets IRS priorities.")
Some tax pros saw the budget as inadequate, though few preparers argue for a broke IRS. “Mediocrity is rewarded and customer service will continue to be compromised under the budget in question,” said EA John Dundon, president of Taxpayer Advocacy Services, in Englewood, Colo.
“I was glad to see that funding remains at 2016 levels, but it still baffles me that the IRS is not more fully funded when the agency brings in more than 90 percent of the money needed to fund the entire government,” said Jeffrey Gentner, an EA in Amherst, N.Y.
“The IRS has been tasked with doing more and more – the ACA and FATCA are just two examples – with less and less. This is not sustainable,” said New York EA Phyllis Jo Kubey. “Without an optimally funded IRS, our country can’t function.”
“I was happy to see that the new IRS priorities include the requirement to maintain employee training programs, including training on taxpayer rights, dealing courteously with taxpayers, cross-cultural relations, ethics and impartial application of the tax laws,” Gentner said. “Also included is the requirement to institute and enforce policies and procedures to safeguard the confidentiality of taxpayer information and protect taxpayers against identity theft.”
EA Terri Ryman, of Southwest Tax & Accounting, in Elkhart, Kan., is glad that the new budget will allocate more funds to the Taxpayer Advocate. “Often – at least more often than I’d like – problems must be escalated to the TA,” Ryman said. “Hopefully they’ll continue to be able to resolve problems arising from taxpayer/IRS disputes.”
Gentner did, however, see nothing in the budget “specifically noted to increase and improve access for tax professionals, especially during the tax season when professionals are trying to assist their clients with problems with the IRS.”
CPA Peggy Johnson in Broken Arrow, Okla., agrees that the IRS must give priority to serving tax practitioners. “A hot line with short wait times, an on-the-spot method of processing a power of attorney and an online method of addressing issues that are relatively simple, as well as many other services for practitioners would be very helpful to the taxpayers they serve,” she said.
Kubey is “thrilled to see that the budget mentions increased oversight of paid tax preparers with reference to the effect this would have on taxpayer compliance, revenue collection, and after-the-fact enforcement of tax law. I do have concerns about greater IRS flexibility to address correctable errors.
“While I understand the considerable cost savings involved for the agency,” Kubey added, “I have serious concerns that taxpayers who receive these error adjustments may not understand that these adjustments aren’t always correct and that they have a right both to contest and to obtain representation to assist them.”
Room for ‘necessary’ improvement
“There’s still a huge tax gap, which, if diminished, would alleviate the deficits,” Connecticut EA Armstrong said. “Congress should allocate resources so that the enforcement budget is tripled, impose criminal penalties on self-prepared returns that contain fraudulent EITC claims, and require 1099 reporting of all income and gaming winnings, and reduce the ridiculously high $20,000 threshold with regard to the reporting of electronic payments.”
Rebuilding audit staff should be a priority, according to Oklahoma CPA Johnson. “Auditors collect many times their salary in taxes that are owed and not voluntarily paid. Every audit position that has been eliminated represents money down the drain,” she said. “Without sufficient audit staff, it is impossible to adequately audit business entities. From the small-business Schedule C and the farm Schedule F to the pass-through S corporations and partnerships to the large multi-national corporations, anything less than a comprehensive audit is completely inadequate.”
“Audits may never be popular, but they’re a necessary and effective means of enforcement and collection,” Johnson added.
She also sees a worthy top priority in lack of timely responses and processing of taxpayer correspondence. “It’s inevitable that many of the adjustments made through the computer matching system are not 100 percent correct. When the taxpayer sends a response to a computer-generated letter, however, it’s often not processed before the collection process kicks in and the taxpayer is billed for taxes that he may or may not owe,” she said. “The inability to process correspondence and solve the related issues timely not only results in poor tax administration, but it puts a larger burden on the Taxpayer Advocate’s office and the Appeals system. It’s in the best interest of the IRS, as well as the taxpayers, to get this problem fixed.”
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