The IRS is running on a contingency plan for the filing season. They are returning 57 percent of the workforce, but without pay. This has set up the perfect storm.
Right now, automated collections notices are going out, and no one is reading mail. Let’s not forget the TCJA comes into play this year, and Congress appropriated additional funds to the Service to comply with the biggest change in tax law in three decades. However, in the past, the IRS has been the subject of public and professional scrutiny for not answering phone calls or questions that taxpayers and professionals have.
So, we can all imagine what is next with this contingency plan.
For many years, Congress has slashed the IRS’s budget. This led to trouble with the Practioner Priority Service (PPS) as well as the national hotlines for taxpayers. People would call the agency and wait on hold for up to two hours. These phone calls led to “courtesy disconnects,” in which the phone service would simply hang up on the individual. Let’s not forget tax season 2018, where the IRS’s computer system went down on tax day, extending the season by one day.
So: With all the problems the IRS has been blamed for in the past, is it fair to blame them this year?
The workforce who is returning for the IRS is not being paid. Think about that for a second. I know it is easy for someone who is self-employed to understand not receiving a paycheck. However, as much as I want to get on the side of all self-employed people by saying, “welcome to the world,” we have to understand that these government workers didn’t sign up for this. Not being paid will cause a morale problem within the Service, whereby customer service will be next to nothing, resulting in a lot of headaches for professionals and taxpayers.
For example, before the shutdown, I had a few clients receive penalty letters from the IRS. I answered them, but then everything stopped, and the matter was referred to the Automated Collections Service (ACS). While these clients are getting notices of the amounts they owe, there is no one to answer my letters asking for an abatement of penalties.
Not to mention, I had a client under audit. I asked for an appeal while the government was open, but now, the client keeps asking if the matter was taken care of. I am getting a little tired of telling them the government is closed and we have to wait for them to reopen.
It is no secret that the IRS’s computer system is built on a 1950s platform. In fact, I tell clients that the IRS computer system is, basically, a hamster on a wheel. The contingency plan basically opens up the system to hackers. Without someone watching what people are doing, the whole thing can be compromised.
The IRS has fought against identity theft and a compromise to the transcript system in the past and has been successful. However, with a staff that's just at 57 percent of the usual total, not to mention the lack of payment, I think we can expect the system will be compromised.
Then there's the TCJA, which I briefly touched on in the beginning of this article. Not only did the tax law change, but the forms have drastically changed as well. We are going to have to deal with a small staff to implement the biggest change in the tax code in three decades. Before the government closed, Congress appropriated, and the President approved, more money to the IRS to implement all the changes in forms and the law. However, now we are stuck with nothing.
If you follow me on social media, you know I have made jokes about the IRS being furloughed and not receiving a paycheck. However, ordering back workers without paying them isn’t only illegal, it's immoral. Morale alone is a reason to fund the IRS. Not to mention, if I have to call them, I would rather have someone that is willing to help, not upset because they haven’t received their paycheck.
I know the myth is "it's us against them." However, my first boss told me something that I will always remember. He said, “We work in concert with the IRS.” I want to state that again, we work with the Service to bring taxpayers into compliance and help mitigate any annoyance of working with the government.
About Craig W. Smalley, EA
Craig W. Smalley, MST, EA, has been in practice since 1994. He has been admitted to practice before the IRS as an enrolled agent and has a master's in taxation. He is well-versed in US tax law and US Tax Court cases. He specializes in taxation, entity structuring and restructuring, corporations, partnerships, and individual taxation, as well as representation before the IRS regarding negotiations, audits, and appeals. In his many years of practice, he has been exposed to a variety of businesses and has an excellent knowledge of most industries. He is the CEO and co-founder of CWSEAPA PLLC and Tax Crisis Center LLC; both business have locations in Florida, Delaware, and Nevada. Craig is the current Google small business accounting advisor for the Google Small Business Community. He is a contributor to AccountingWEB and Accounting Today, and has had 12 books published on various topics in taxation. His articles have also been featured in the Chicago Tribune, New York Times, Yahoo Finance, Nasdaq, and several other newspapers, periodicals, and magazines. He has been interviewed and been a featured guest on many radio shows and podcasts. Finally, he is the co-host of Tax Avoidance is Legal, which is a nationally broadcast weekly Internet radio show.