On January 25, just hours before President Trump announced a temporary reprieve from the government shutdown, the AICPA released details of a letter it had sent to the IRS expressing concerns about the shutdown’s impact on taxpayers and tax practitioners.
The letter, which was addressed to Treasury Secretary Steven Mnuchin and IRS Commissioner Chuck Rettig, was written by Annette Nellen, chairperson of the AICPA Tax Executive Committee.
“The need for unhindered availability of a fair and administrable tax system is rising as we approach the opening of tax filing season,” wrote Nellen. She acknowledged the “inherent and systemic limitations” currently at the IRS, but called for additional steps to reduce the harm to the public. “According to our members, the many IRS services and processes that are not functioning, or are not functioning at their normal levels, are creating more problematic issues.”
The letter listed the following common challenges identified by AICPA members:
- Automated notices: The IRS continues to mail automated IRS collection notices, automated warnings of asset seizures and Notices of Intent to Levy, as well as automatically transferring cases to collections, when there is no staff to respond to attempted replies to resolve the issue or prevent the IRS threatened action from occurring.
- Audits and appeals: The IRS had suspended all audit, examination, and appeals activity (unless the statute of limitations will expire). Unfortunately, this means that tax practitioners are unable to communicate with IRS employees to resolve audit issues in a timely fashion. Also, 90-day letters from the IRS will continue to expire and it is uncertain how the IRS will treat expirations of response deadlines and statute of limitations during the shutdown.
- Online systems and accounts: Some taxpayers and tax practitioners are having difficulty accessing and using online accounts. Furthermore Form 2848, Power of Attorney and Declaration of Representative, isn’t being processed, but this is required for practitioners to act on behalf of taxpayers.
- Taxpayer assistance: While live telephone customer service assistance for taxpayers and tax practitioners is limited, all IRS walk-in taxpayer assistance centers have been closed.
- Implementation of the TCJA: Due to the massive changes under the Tax Cuts and Jobs Act (TCJA), more guidance for 2018 tax returns is needed from the IRS. According to the filing season contingency plan, there are only 346 excepted staff in the Chief Counsel’s office (including 56 excepted because their activities concern the TCJA). With limited staff working on TCJA implementation, a slowdown in releasing crucial guidance seems likely. Many tax forms and instructions are also still in the “draft” stage and pending approval or remain in a non-submittable format, likely resulting in problems with readiness of tax preparation software.
Accordingly, Nellen offered these recommendations on behalf of the AICPA:
- Provide automatic extension of notices and collections until 90 days from the shutdown ending date, stop assessing penalties and interest and cease sending automated notices
- Maintain all online systems and accounts operating effectively
- Provide full assistance to taxpayers and tax practitioners
- Retain more IRS Chief Counsel attorneys for TCJA guidance
It remains to be seen how quickly the IRS can recover from the shutdown during the brief respite and what will happen if another shutdown can’t be averted by February 15th. In any event, the AICPA recommendations nay help the IRS “catch up” during the first few critical weeks of tax filing season. We will continue to inform you about any significant new developments.
About Ken Berry
Ken Berry, Esq., is a nationally known writer and editor specializing in tax, financial, and legal matters. During his long career, he has served as managing editor of a publisher of content-based marketing tools and vice president of an online continuing education company. As a freelance writer, Ken has authored thousands of articles for a wide variety of newsletters, magazines, and other periodicals.