By Ken Berry
Mark W. Everson, the former Commissioner of the IRS, sees a bumpy road ahead in tax circles due to pending sequester cuts, growing taxpayer identification theft, and looming health care reforms. But Everson has complete faith in the nation's tax collector's ability to rise to the challenges it will be facing.
Everson, who held the post of IRS Commissioner from 2003 until 2007 during President George W. Bush's two terms, currently serves as vice chairman of alliantgroup, a Texas-based provider of specialty services to CPA firms and businesses. In an exclusive phone interview with AccountingWEB, Everson held forth on a broad range of tax-related topics. Following are several snippets.
The Fiscal Cliff and the Sequester
The fiscal cliff law – which was enacted at the turn of the year – forced the IRS to scramble to update forms and to schedule and make other revisions to accommodate filings of 2012 returns. Everson lauds the agency for keeping the delays to a minimum. "The IRS has done everything in its power to protect the tax filing season", he said. But he also alluded to other concerns on the near horizon, as changes under the massive health care legislation begin to kick in.
Everson thinks the furloughs for IRS staffers that are planned for the summer will have a gradual effect. "It will take longer to get through to the IRS", he said, acknowledging that both taxpayers and practitioners will have to put up with service cutbacks.
The IRS certainly isn't alone in this regard. "Everyone gets the same nick", said Everson. "Over 90 percent of the cost is in personal costs, so you can't avoid the furloughs." Everson sees a squeeze coming on enforcement activities in the near future, acknowledging that the IRS can't maintain its current levels. He predicts a reduction in the number of audits and appeals as a result of the sequester.
In his current position as an adviser to the business sector, Everson knows firsthand the frustrations many employers are experiencing, especially when they can't plan for the future with certainty.
"The new fiscal cliff law codified the Bush-era tax cuts", said Everson. "But it just 'rolled over' the provisions for businesses. Yet again, a period of uncertainty is out there." He mentioned the R&D credit as an area where a permanent extension would have been beneficial. Referring to the current state of affairs as a "transition period", Everson cited permanency as the "pillar of fairness" for taxpayers. He further counsels business managers to "work closely with CPA firms to take advantage of benefits like the R&D credit."
Everson believes that, under the circumstances, the IRS has been reasonably successful in combatting cyber identity theft. He says the IRS computers are programmed to ferret out imposters, but it's a time-consuming and imperfect system. "It's a delicate balance, where you have to avoid 'false positives.' My understanding is that the false positives are down to 10 percent", he said.
The problem of cyber theft is pervasive, notes Everson, accentuated by an anecdote he told AccountingWEB. During one of his numerous public speaking engagements, he asked an audience comprised mainly of CPAs how many of them had experienced identity theft. Everson estimated that 30 to 40 percent raised their hands. That's not to say that 30 to 40 percent of practitioners have been victimized themselves, but it does go to show how widespread the problem is.
Positives and Negatives
Everson capped off the Q&A session by commending the IRS for pulling off the tax filing season inside an intense pressure cooker. The biggest negative he sees is the interim tag that he claims is hindering Acting Commissioner Steven Miller, urging Congress and President Obama to name a qualified candidate, such as Miller or someone else, as the new commissioner. He contends this will enable the IRS to better interact with Congress in addressing the pressing tax issues facing the nation. In any event, the outlook remains daunting.