The AICPA likes what it has seen so far in the IRS strategic operating plan for the $80 billion that Congress appropriated over 10 years as part of the Inflation Reduction Act of 2022, P.L. 117-169, although it still recommends that use of funds congressionally allocated to enforcement also be applied to training, customer service, and modernization, as part of enforcement efforts.
"Based on what we see in the outlined plan, AICPA is encouraged that many of the spending areas line up with items AICPA has also requested, including increased customer service and the reduction of the backlog of returns," Peter Mills, AICPA senior manager–Tax Policy & Advocacy, said in a news release Wednesday.
The plan, released last week, provides budget information for three fiscal years, during which the bulk of the money goes to operations support.
The $8.7 billion IRS spending plan for fiscal years 2022, 2023, and 2024 includes almost $3.5 billion (40%) for operations support; $1.78 billion for enforcement (20%); and almost $1.7 billion each (19%) for business systems modernization and taxpayer services.
The IRS also plans to concentrate its audits on wealthy taxpayers, large partnerships, and S corporations as it attempts to close the tax gap, which averaged $496 billion per year for tax years 2014 through 2016.
Over the last two years, the AICPA has recommended that the IRS focus on stronger taxpayer services, including in a letter sent to IRS leaders at the end of March. The new plan focuses on expanding digital services and innovation, enabling taxpayers to access their data, helping taxpayers understand and claim appropriate credits and deductions, and efforts to make payments easy, the AICPA said in Wednesday's statement.
The AICPA said it was encouraged to see that the IRS plans to retire legacy applications, adopt modern systems, give IRS employees the technology they need to effectively serve taxpayers, and give taxpayers and practitioners the tools they need to access their data. The AICPA has previously suggested that the IRS create a practitioner portal, and in the plan the IRS says it will allow tax professionals to view status information for their clients. It will also give taxpayers the ability to authorize tax professionals to track status information for them through the online Tax Pro Account platform.
Over 10 years, $3.2 billion is allocated for taxpayer services; $4.8 billion for business systems modernization; $45.6 billion for enforcement; and $25.3 billion for operations support. The plan's $79.4 billion in proposed investment over 10 years includes $4.3 billion for improved taxpayer services and $3.2 billion to "quickly resolve taxpayer issues when they arise"; $12.4 billion to "deliver cutting-edge technology, data, and analytics"; $8.2 billion for workforce training; and $3.9 billion to support the implementation of the energy tax incentives outlined in the Inflation Reduction Act.
"The AICPA is grateful that the IRS is placing greater emphasis on improving service issues, however, we continue to urge the IRS to adopt other recommendations, including continued suspension of certain automated collection notices and making all forms available for electronic filing," Mills said. "The IRS should consider broadening the use of the $45.6 billion in funds congressionally allocated to enforcement and utilize those funds to include all training, customer service, and systems modernization related to any type of enforcement. This plan is an opportunity to engage in conversation between the IRS, Treasury, and other outside stakeholders to ensure this funding is spent smartly and will reap the most benefits."
— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.