NAEA Calls for IRS Reform
This Week's News
March 30, 2018
Our national affiliate has been hard at work looking out for the best interests of both taxpayers and tax professionals, demonstrating their value in advocating at the federal level. Last week, NAEA released reform recommendations in response to the general downward trend of IRS services and the lack of a clear direction for moving forward. The letter from NAEA President Jim Adelman and the accompanying white paper, a powerful document that can be read in its entirety here, details a system at the IRS that creates a false compromise between providing service and assuring compliance for taxpayers.
NAEA asserts that the IRS must develop a strategic mission shared by its many stakeholders, and that Congress must consider governance, management, personnel and budget changes to assure IRS provides top quality service. Contending that a focus on taxpayer rights is essential to any reform effort, NAEA argues that the Service is missing significant opportunities to assure taxpayers are served by tax preparers who are at least minimally competent and trustworthy. Their recommendations include:
Congress should override Loving and all subsequent cases;
OPR should be empowered to issue and enforce cease-and-desist letters; and
A dedicated practitioner services unit should be created.
Additionally, NAEA would like to see broad sweeping reforms of primary Service operations to address:
Agency oversight, governance, and management;
Workforce culture and leadership;
Insufficient and ineffective budgeting processes;
Dispute resolution practices; and
Organizational future planning.
Nowhere is the need for reform more evident than when you call the IRS. Long hold times are standard, and when you are able to reach an IRS representative, they may not be able to appropriately address your questions. The cause of this is twofold:
A lack of resources afforded to the IRS through its budgeting process; and
Representatives who field questions often lack the necessary training and thus competency to address certain issues.
To address the mismanagement of budgetary funds, NAEA has proposed that the annual joint Congressional hearing be re-established to review service levels and compliance, strategic and business plans, technology and modernization, and filing season performance. A review hearing is important because it would help establish a budget that provides the funding necessary to meet mutually agreed upon levels of service and compliance, and then allocate those funds with a priority on timeliness and efficiency. It is a practical step toward improving taxpayer service and compliance simultaneously. NAEA also contends that a reformed budget must provide appropriate staffing at the points of significant taxpayer contact and better training at all levels.
Workplace reform is also needed in order to increase competency at the IRS, and NAEA asserts that a clear and consistent training program is imperative to achieving that end. Their recommendations include creating and funding a dedicated training division within the IRS designed to do the following: increase competency, streamline the education process, ensure that tax law and administrative policies are being taught consistently throughout the country, and research innovative administration techniques.
The taxpayer services and dispute resolution section of the paper addresses the issues arising from delayed or protracted compliance activity. Providing collection staff with a wider discretion to reach early settlements of payment plans would prevent taxpayers from compiling penalties on similar positions taken on later returns. Additionally, these efforts could be supplemented by incorporating a number of taxpayers’ rights changes. NAEA goes on to list some proposals from the 2017 Taxpayers’ Advocate’s Purple Book that would go a long way in ensuring that effective taxpayer-centered compliance activities are par for the course at the IRS.
Moving forward, NAEA commends the IRS for keeping on top of the rapidly evolving identity theft and fraud scams that so frequently impact taxpayers. Along with technology, the IRS’ strategic plan must focus on setting and maintaining a consistent long-term strategy. Only then can it execute those focused plans for improvement, and ensure that its budget, staffing, and technology are aligned with organizational success. In order for this plan to be successful, NAEA suggests that several changes be made to IRS governance practices.
Shortly after NAEA submitted their letter to Congressional Committee leaders, House Ways and Means Oversight Subcommittee Chair Lynn Jenkins (R-KS) and Ranking Member John Lewis (D-GA) introduced a discussion draft of a long-awaited IRS reform effort. This draft incorporates uniform electronic signatures on disclosure authorizations and demonstrates what NAEA can accomplish on a national level. More correspondence regarding the contents of the draft will be provided by NAEA in the coming weeks, but in the meantime you can read the initial discussion draft here.