IRS Commissioner Charles Rettig will report on the current tax filing season to the House Ways and Means Committee's Oversight Subcommittee next week, the subcommittee's chair, Bill Pascrell Jr., D-N.J., announced Thursday.
The hearing on March 17, starting at 10 a.m. ET, will be webcast live, available at the Ways and Means Committee's website.
AICPA President and CEO Barry Melancon, CPA, CGMA, in a statement Friday, thanked Pascrell and welcomed Rettig's testimony, which he said comes as taxpayers and practitioners "struggle with an extraordinarily difficult filing season."
"Holding this hearing now, rather than waiting until April, is critical because it allows the subcommittee the ability to assess firsthand the IRS's response and plans for the remainder of this tax filing period," Melancon said.
The Oversight Subcommittee heard from National Taxpayer Advocate Erin Collins on Feb. 8 about challenges facing taxpayers. In her testimony, Collins identified the IRS's near-term hurdles, chief among them delays in processing returns and correspondence and a resulting backlog. Processing paper returns would likely remain the Service's biggest predicament throughout this year, Collins said. As of last month, the backlog included 17.6 million tax returns and nearly 6 million items of taxpayer correspondence, Collins told the Senate Finance Committee on Feb. 17.
Collins proposed solutions that she said should also reduce the current filing season's challenges — some of which the IRS has now implemented to one degree or another. These included implementing a "surge strategy" of allocating employees to processing returns; bolstering its hiring and pay of processing personnel; suspending automated collection notices; pausing collection activity until 45 days after it addresses the merits of a taxpayer's response to an adjustment, proposed liability, or math error assessment; providing penalty relief for all taxpayers whose returns were delayed in processing; and assigning a team to expedite processing of claims for tentative carryback refunds and quarterly payroll tax returns.
Melancon on Friday identified five further "opportunities for immediate action" by the IRS, focusing on taxpayer relief, that he said would reduce taxpayers' need to contact the Service, thereby allowing it to dedicate more time to reducing the backlog:
- Aligning taxpayer account holds with the time it takes to process and resolve issues. Upon taxpayer request, the IRS may agree to hold off a collection action, but, because of the backlog, for a shorter period than it takes to assess the taxpayer's claim or request, such as for a penalty abatement.
- Honoring requests for reasonable-cause penalty abatement in a manner similar to the IRS's first-time abatement procedures.
- Delaying until 2023 the implementation of new Schedules K-2 and K-3 required of passthrough entities with "items of international tax relevance" and U.S. persons who are partners of foreign partnerships.
- Offering broad underpayment and late-payment penalty relief.
- Temporarily discontinuing additional automated notices.
Those recommendations have been made previously by the AICPA, either on its own, in conjunction with a coalition of tax professionals, or in league with state CPA societies. Recently, the IRS has announced two surge teams and other staffing and pay reinforcements, along with plans to hire additional processing personnel, including yesterday's announcements of ways it will capitalize on its recently granted direct-hire authority.
And it has temporarily stopped some automated notices. The IRS and Treasury said in a news release on Thursday that, as part of an "aggressive plan" to clear the backlog by the end of this year, the Service has temporarily halted sending about 40 form notices to taxpayers, including automated notices of additional tax owed, when the IRS has no record of receiving the corresponding tax return.
Yet the IRS can and should do more, Melancon said, to enable the filing season to proceed without being hobbled by its processing backlog.
"We look forward to hearing from the commissioner on how he will use the tools already at his disposal to help taxpayers now," Melancon said.
The AICPA continues to advocate for better IRS services; visit the webpage describing AICPA advocacy efforts to learn more.
— To comment on this article or to suggest an idea for another article, contact Paul Bonner at Paul.Bonner@aicpa-cima.com.