IRS should automate name, address changes, AICPA says

The AICPA is urging the IRS to automate the process for updating taxpayer names and addresses, saying that current processing delays can create compliance problems and unnecessary costs for taxpayers.

In a letter to the IRS dated Monday, the AICPA said members report that name and address changes can take six to eight weeks or longer to process, despite often being routine requests. The AICPA said delays can result in IRS notices being sent to incorrect addresses; delayed refunds and payments; rejected tax forms and correspondence; and disruptions involving vendors, payroll providers, and financial institutions.

The letter recommended that the IRS create an automated electronic process allowing taxpayers and authorized practitioners to submit name and address change requests through IRS online accounts and receive immediate confirmation.

“By prioritizing and automating this taxpayer account maintenance process, the IRS would effectively allow for the timely, accurate, and efficient updating of taxpayer information and the dedication of IRS resources to higher-priority tax administration issues,” the AICPA said.

Taxpayers now submit paper forms to request address changes and generally must provide signed letters and supporting documentation for name changes, the letter said. Although taxpayers can also notify the IRS of changes on annual tax returns, the AICPA said that method provides little flexibility when changes occur between filing seasons and does not always ensure that taxpayer information is updated.

Delayed processing can have significant consequences when taxpayers do not receive IRS correspondence promptly, potentially leading to additional penalties and interest, lost appeal rights, and escalated collection activity, the letter said.

An automated system could verify routine requests using information from sources such as state business registration databases and the U.S. Postal Service’s change-of-address database, the letter said. Requests that cannot be verified automatically or that present fraud risks could be routed for manual review, the letter said.

The AICPA also recommended that the IRS provide electronic status updates for requests, similar to those available for installment agreements. Under that approach, taxpayers and practitioners could track whether requests are pending review, approved, rejected, or require additional verification.

“This approach is consistent with the AICPA’s prior recommendations to transform the IRS’s technologies and taxpayer services in a way that [approximates] comparable private-sector services and [allows] taxpayers and practitioners to resolve account issues in a timely and efficient manner,” the letter said.

The AICPA said that real-time or near real-time processing of routine name and address changes would reduce compliance costs, minimize operational disruptions, and improve tax administration for both taxpayers and the IRS.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.