The AICPA said Thursday it appreciates the IRS's announcement it will halt some notices to taxpayers but said the IRS can do more to reduce erroneous automated notices and unnecessary taxpayer contact.
In addition, the Tax Professionals United for Taxpayer Relief Coalition, which includes the AICPA, said Thursday it appreciates the IRS's announcement as a "good first step" but likewise called for broader relief.
"The majority of erroneous notices are a result of numerous other circumstances where taxpayers are crying out for help, especially the underserved and minority communities," the coalition said in a statement.
Both the coalition and the AICPA also noted that members of Congress requested specific taxpayer relief measures in a letter signed by 191 representatives and 25 senators, on Wednesday.
In the IRS statement, posted to its website on Thursday, the Service said it was suspending issuing certain automated notices and related actions, such as where it has credited taxpayers for payments but has no record of the corresponding tax return having been filed. In such instances, the return "may be part of our current paper tax inventory and simply hasn't been processed," the IRS acknowledged.
However, the IRS said that many notices are required by statute to be issued within a certain time to be legally valid. These notices must be sent unless Congress provides otherwise, the Service said. Also, stopping notices may require programming and other operational changes that could jeopardize its admittedly outdated system and thus its ability to process returns in the current filing season, the Service said.
AICPA President and CEO Barry Melancon, CPA, CGMA, said the IRS could provide the requested relief independently of Congress.
"The actions taken today by the IRS signal their desire to help taxpayers, but we believe that there is more they can do and respectfully disagree with the IRS's assertion that congressional action is needed to suspend the automatic issuance of notices," Melancon said. "All of the recommendations put forth by the AICPA and the coalition are actions that we believe the IRS can legally take right now to provide immediate relief to taxpayers."
The AICPA and other stakeholders would appreciate hearing from IRS Commissioner Charles Rettig about which measures Rettig believes the IRS can take on its own and which others require congressional action, Melancon said. The latter would no doubt be acted upon swiftly by Congress, he said, noting the letter from members of Congress.
"We appreciate the strain the IRS is under and continue to urge them to fully implement all of our recommendations to alleviate unnecessary stress on the agency and the taxpayers," Melancon added.
The IRS said it is "looking at the suggestions that have come in" regarding taxpayer relief and will continue to adjust its efforts to help taxpayers and the tax community.
Those suggestions also include letters from the AICPA and the coalition. On Tuesday, the coalition held a press conference in which it discussed the recommendations of its letter to the IRS, Treasury, and members of congressional tax-writing committees the week before.
The coalition asked the IRS to discontinue automated compliance actions until it can provide resources to resolve taxpayer issues; suspend collection actions while it processes penalty abatement requests; offer a reasonable-cause penalty waiver without affecting taxpayers' future eligibility for a first-time abatement waiver; and provide relief from penalties for underpayment of estimated taxes and late payments for the 2020 and 2021 tax years.
The coalition on Wednesday also thanked members of Congress who joined in signing a letter to Treasury Secretary Janet Yellen asking for taxpayer relief along similar lines to those requested by the coalition. The letter acknowledged the stress that the COVID-19 pandemic has imposed upon the IRS and other federal agencies, as reflected in the Service's backlog as of December 2021 of millions of returns.
Moreover, the backlog included more than 2 million Forms 941, Employer Quarterly Tax Returns, that must be processed before 500,000 amended Forms 941 could be processed, the letter noted. Many or most of the amended returns claim payroll tax relief enacted in response to the pandemic in the form of refundable credits. Employers' inability to receive these refunds "has been devastating to small businesses," the letter stated.
The members of Congress said they support the IRS and realize that it operates with "antiquated technology and a constrained budget," which exacerbate the "extraordinary challenges of the COVID-19 pandemic." Nonetheless, they said, five specific relief measures are needed:
- Halt automated collections from now until at least 90 days after April 18, 2022;
- Delay the collection process for filers until any active and pending penalty abatement requests have been processed;
- Streamline the reasonable-cause penalty abatement process for taxpayers affected by the COVID-19 pandemic without a need for written correspondence;
- Provide targeted tax penalty relief for taxpayers who paid at least 70% of the tax due for the 2020 and 2021 tax years; and
- Expedite processing of amended returns and provide the Taxpayer Advocate Service (TAS) and congressional caseworkers with timely responses.
The members of Congress noted that TAS has ceased accepting cases solely involving processing of amended returns.
"When our constituents cannot get assistance from the IRS and TAS, they contact us, and we have our hands tied at this point as well," they 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.