Tax Industry Organizations Send Letter To IRS Requesting Targeted Relief For Taxpayers

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Organizations representing professionals in the tax industry today sent a letter IRS Commissioner, Charles Ratig, and the Department of the Treasury’s assistant secretary for tax policy, Lily Batchelder, request specific relief for taxpayers for the 2022 tax season. The letter reminds the commissioner and assistant secretary that the IRS “still has an unprecedented number of unprocessed returns” compared to pre-pandemic years. It also notes that these unprocessed returns have resulted in “multiple false targeted notices, liens and levies”. With the IRS answering only 9% of all calls and only 3% of calls regarding individual income tax returns, any resolution that minimizes call and/or mail volume or an expedient and final resolution to the tax matter offers, should be considered.

The letter states that the IRS “has not taken appropriate action that would meaningfully reduce the unnecessary burden during this upcoming tax filing season” and offers the following four solutions:

  • Discontinue automated compliance actions until the IRS has the resources to obtain a fair and timely resolution of cases.
  • Aligning requests for the account by the time it takes for the IRS to process the request for penalty reduction. In other words, if the IRS is going to take six months to resolve the matter, the account hold should be for six months.
  • Provide a reasonable cause penalty waiver similar to a “first time exemption” (FTA)
    FTA
    Exemption that does not affect a taxpayer’s future eligibility for an FTA.
  • Provide targeted relief to taxpayers from both underpayment of estimated tax penalties and late payment penalties for tax years 2020 and 2021.
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Implementing either of these solutions will give much needed breathing space to the taxpayers and their representatives as the e-filing for individual returns for the 2022 filing season opens on January 24, 2022. Implementing all four can be a game changer for taxpayers and tax professionals alike. Since both the IRS and the National Taxpayer Advocate have expressed concerns about delays in return processing affecting refund delivery times in the upcoming filing season. Penalty relief is always welcome, but even more so in the face of the end of advance child tax credit payments, the end of multiple eviction moratoriums and ongoing COVID-related disruptions to school, childcare and work. Adopting procedures that more closely align notices, compliance actions, and account timing with the time the IRS actually needs to resolve a matter given its current status and resources, allowing the IRS to Will reduce the need for multiple calls and/or mailings. single case. In other words, the recommended solutions will not only help taxpayers and their representatives, they will help the IRS to close these often petty tax disputes faster by reducing call and mail volumes and giving IRS representatives the time and authority.

Signatories to the letter include the American Institute of Certified Public Accountants (AICPA), the National Association of Enrolled Agents (NAEA), the National Association of Tax Professionals (NATP), LatinotexPro, the National Society of Black CPAs and Prosperity Now.

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