As part of a diverse coalition of organizations representing tax professionals and other stakeholders — and in light of the continuing COVID-19 pandemic — the AICPA on Friday called on the IRS and Treasury to implement taxpayer relief from penalties and certain other compliance actions.
The AICPA was among parties signing a letter to IRS Commissioner Charles Rettig and Lily Batchelder, assistant secretary for tax policy at Treasury, that was copied to members of the Senate Finance Committee and the House Ways and Means Committee.
Although the pandemic has created unforeseen and prolonged problems for the IRS, taxpayers, and tax professionals, the IRS has not taken reasonable actions to reduce burdens that appear likely to continue into the upcoming tax filing season, the letter stated.
Given the IRS's historically large backlog of unprocessed returns and correspondence and inability to answer more than a tiny fraction of the phone calls it receives, the Service has been unable in many cases to respond to taxpayers' requests to resolve even straightforward issues. Taxpayers and their representatives are often unable to communicate with the IRS even to curtail erroneously initiated enforcement actions, the letter stated.
Consequently, the letter recommended the IRS should:
- Discontinue any automated compliance action until the Service can devote necessary resources to properly and timely resolve a matter. National Taxpayer Advocate Erin M. Collins made a similar point Wednesday in her Annual Report to Congress, listing as No. 1 of the 10 most serious problems taxpayers face that excessive processing and refund delays are harming taxpayers.
- Align requests for account holds with the time it takes the IRS to process any penalty abatement requests.
- Offer a reasonable cause penalty waiver, similar to the procedures of a first-time abatement (FTA) administrative waiver, without affecting the taxpayer's eligibility for FTA in future tax years.
- Provide taxpayers with targeted relief from both the underpayment of estimated tax penalty and the late-payment penalty for the 2020 and 2021 tax year.
All four points were also conveyed earlier this week in a statement by Barry Melancon, CPA, CGMA, president and CEO of the AICPA, and have been urged repeatedly by the AICPA for the past year and a half. Consistent with those recommendations and Collins's assessment in her Annual Report, tax practitioners have said that, barring relief measures and more robust administrative capabilities for the IRS, they fear the upcoming tax season will compound the past two years' challenges.
The other signatories to the letter are Latino Tax Pro, the National Association of Black Accountants, National Association of Enrolled Agents, National Association of Tax Professionals, National Conference of CPA Practitioners, National Society of Accountants, National Society of Black Certified Public Accountants, National Society of Tax Professionals, Padgett Business Services, and Prosperity Now.
— To comment on this article or to suggest an idea for another article, contact Paul Bonner at Paul.Bonner@aicpa-cima.com.