IRS Commissioner John Koskinen addressed hundreds of attendees at the AICPA National Tax Conference recently and noted that the 2015 tax season will be one of the most complicated tax seasons ever. This is, in part, because two new provisions introduced in the Patient Protection and Affordable Care Act of 2010. They include the premium tax credit and the individual shared-responsibility payment or “individual mandate” to maintain minimum essential health coverage.
Congress has not made it easier by its late action or inaction on legislation to extend temporary tax provisions that mostly expired at the end of 2013. This continued uncertainty is stressing out the entire tax community, including the IRS. Kevin Thompson, CPA says “I thought things could not have been worse than they were for tax season 2014. This is setting up to be just that.”
If nothing is decided into 2015, or contains new or modified provisions, the IRS may need to delay the start of filing season which will delay the processing of returns. Thompson says, “Last year we were delayed until almost March 1 in the ability to file tax returns. It made for a miserable March and April.”
Reductions in the IRS’s funding have made it even harder to provide reasonable service to taxpayers, provide enforcement and update old technology systems. Its budget has declined by 7% since 2010.
Many taxpayers have found it impossible to get through to the IRS to have questions answered because call centers are not working efficiently. The average wait time has been 34 minutes. For the practitioners priority hotline, the average wait time is 52 ½ minutes.
The IRS asked for $430 million for processes, forms and regulations and $300 million to improve its information technology systems for fiscal 2014. They received zero. “As an organization, the IRS is underfunded and overwhelmed. I am not sure they can achieve any mandate without funding. That said, I am not an advocate of additional spending. Instead, I would like to see the IRS partner with tax practitioners to ensure that taxes are prepared and filed timely and collection matters are dealt with in a timely fashion.”
Koshinen has been attempting to improve online taxpayer and practitioner service to be comparable to a typical financial institution. A sore point has been the fact that the IRS had to shut down its e-filing system for maintenance from Oct 11 – Oct 13 on the eve of the extended date for 2013 returns. Generally, the IRS takes advantage of holidays to perform maintenance tasks. Those who filed returns that week will be given relief from late penalties.
The IRS is making an effort to combat tax identity theft. Koshinen calls it “one of the three or four most important issues we’re dealing with.” The greatest number of identity theft cases took place between 2010 and 2012. 1,200 – 1,500 people were investigated, arrested, and sentenced and more safeguards implemented. Improper payments to identity thieves are much lower but still a problem with an anticipated 3,000 to 4,000 victims in 2015. Most amateurs have been taken off the streets leaving organized crime and syndicates all over the world.
The IRS has improved in correcting victim’s accounts and has reduced the time from one year to 120 days which is still too long. Ongoing initiatives to fix the problem include consolidating victim assistance in a single IRS unit and a pilot program offering identity protection personal identification numbers to all taxpayers in in regions where identity thieves have operated. Currently the pilot program is available in Georgia, Florida, and D.C.
“In summary” says Thompson, “I feel like a psychic predicting a train wreck. Failure seems inevitable.”
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