For taxpayers, impact on IRS can be significantAs April 15th approaches, the American Institute of CPAs (AICPA) identifies challenges government shutdown poses for taxpayers in letter to Treasury and IRS, and makes recommendations.
January 25, 2019 — WASHINGTON–(BUSINESS WIRE)–The American Institute of CPAs (AICPA) has written U.S. Secretary of the Treasury Steven T. Mnuchin and Internal Revenue Service (IRS) Commissioner Charles P. Rettig raising concerns about the effect that the government shutdown is having on taxpayers and tax practitioners.
Annette Nellen, CPA, CGMA, Esq., chair of the AICPA Tax Executive Committee, wrote, “The need for unhindered availability of a fair and administrable tax system is rising as we approach the opening of tax filing season.” Nellen acknowledged the “inherent and systemic limitations both Treasury and the IRS face during the shutdown,” but called for additional steps to “reduce the harmful effect on the public.”
“The AICPA wants to share feedback regarding the effect of the government shutdown on this year’s tax filing season,” Nellen wrote. “According to our members, the many IRS services and processes that are not functioning, or are not functioning at their normal levels, are creating more problematic issues.”
The most common challenges identified by AICPA members are the following:
IRS continues to mail automated IRS collection notices, automated warnings of asset seizures and Notices of Intent to Levy, as well as automatically transferring cases to collections, when there is no staff to respond to taxpayers’ attempted replies to resolve the issue or prevent the IRS threatened action from occurring.
IRS Audits and Appeals
IRS has suspended all audit, examination, and appeals activity (unless the statute of limitations will expire). Unfortunately, this suspension means that tax practitioners are unable to communicate with IRS employees to timely resolve taxpayers’ audit issues. Also, 90-day letters from the IRS will continue to expire and it is uncertain how the IRS will treat expirations of response deadlines and statute of limitations during the shutdown.
Online Systems and Accounts
Some taxpayers and tax practitioners are having difficulty accessing and using online accounts. Additionally, Form 2848, Power of Attorney and Declaration of Representative, is not being processed but is required for practitioners to act on behalf of taxpayers.
Limited Assistance Available
Live telephone customer service assistance for taxpayers and tax practitioners is limited, and IRS walk-in taxpayer assistance centers are closed.
Tax Cuts and Jobs Act (TCJA) Implementation Forms and Guidance Slowdown
Tax practitioners and taxpayers need more guidance from IRS for 2018 tax returns. According to the filing season contingency plan, there are only 346 excepted staff in the Chief Counsel’s office (including 56 excepted because their activities concern the TCJA). With limited staff working on TCJA implementation, a slowdown in releasing crucial guidance seems likely. Many tax forms and instructions are also still in the “draft” stage and pending approval or remain in a non-submittable format, likely resulting in problems with filing season readiness of tax preparation software.
On behalf of the AICPA, Nellen offered the following recommendations:
- Provide automatic extension of notices and collections until 90 days from the shutdown ending date, stop assessing penalties and interest and cease sending automated notices;
- Maintain all online systems and accounts operating effectively;
- Provide full assistance to taxpayers and tax practitioners; and
- Retain more IRS Chief Counsel attorneys for TCJA guidance.
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with more than 431,000 members in 137 countries and territories, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for its members and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives professional competency development to advance the vitality, relevance and quality of the profession.
The AICPA maintains offices in New York, Washington, DC, Durham, NC, and Ewing, NJ.