In this Issue:
NSA, Other Groups Join to Recommend IRS Service Improvements
NSA and other tax professional groups today wrote to members of Congress today urging a comprehensive set of recommendations designed to improve services provided by the IRS to taxpayers and tax practitioners. The groups called for an improved governance and oversight structure for the IRS and proposed a new unit within the IRS that would centralize the agency's services to tax practitioners. A copy of the group's report is available here. Also available are the group's letter to congressional tax writers and NSA's press release accompanying the publication of the group report.
The recommendations were developed by the groups over several months and are endorsed by NSA and the following organizations: AlliantGroup, AICPAs, Crowe Horwath, LLP, NAEA, NATP, NSTP, National Conference of CPA Practitioners, and Padget Business Services. NSA's endorsement follows approval by NSA's Federal Taxation Committee and by the NSA Executive Committee.
"The current degradation of the IRS taxpayer services is unacceptable," the groups stated in their framework, Ensuring a Modern-Functioning IRS for the 21st Century, As an example of how poor the service has become, the paper cited figures from the National Taxpayer Advocate's 2016 Annual Report to Congress that reported the percentage of taxpayer calls answered by the IRS between 2004 and 2016 has dropped from 87 percent to 53 percent.
"As tax practitioners, we advise millions of taxpayers on tax matters, assist them with compliance responsibilities, and represent them before the IRS," the groups wrote. "We understand what is working and not working with tax administration from both taxpayer and practitioner perspectives. As one of the IRS's most significant stakeholders, we are both poised and committed to being part of the solution."
The groups noted as "striking" the similarities between the condition of the IRS today and the circumstances that motivated creation of the National Commission on Restructuring the Internal Revenue Service more than 20 years ago. Therefore, the groups recommended that any effort to modernize the IRS and its technology infrastructure should build on the foundation established by the Restructuring Commission and the report issued by the Commission in June 1997.
The recommendations are generally based, consequently, on the vision statement in the Restructuring Commission's report. Among the governance and oversight recommendations are:
- Setting and maintaining consistent priorities and strategic direction;
- Re-establishing the annual joint hearing review by the Joint Committee on Taxation;
- Requiring the Joint Committee on Taxation to provide a bi-annual report;
- Requiring a Government Accountability Office review of the IRS Oversight Board;
- Enabling the hiring of qualified and experienced professionals at the IRS;
- Determining the appropriate level of service and compliance they want the IRS accountable to provide and dedicating appropriate resources for the agency to meet those goals; and
- Gauging performance with customer satisfaction surveys.
Also recommended is a new dedicated "executive-level" practitioner services unit within the IRS that would centralize and modernize the IRS's approach to all practitioners. The groups explained that over time, the IRS has established a number of functional departments. As a result, IRS employees are dispersed across the IRS and are not coordinated in a way that enables practitioners to timely access critical information (such as their clients' account status or the availability of dispute resolution opportunities). Nor do the current IRS teams or processes systematically solicit, gather or evaluate practitioner feedback, they charged.
"Enhancing the relationship between the IRS and practitioners would benefit both the IRS and the millions of taxpayers served by the practitioner community," according to the group. "We are committed to a service-oriented, modernized tax administration system that earns the respect and appreciation of all taxpayers and stakeholders," they concluded.
The IRS has issued the following statement about the group report:
"These professional groups play a critical role in the nation's tax system, and the IRS values their insights and observations. We will be reviewing their recommendations and look forward to continuing the dialogue on these and other issues of mutual importance. In general, the IRS agrees with the thrust of the paper and the goals they highlight, ranging from the importance of improving taxpayer service to the need to attract and retain skilled, experienced employees. Although some of these involve issues that are ultimately within Congressional and Administration domains, we appreciate our partners' initiative in offering ways for us all to better serve the compliance needs of the taxpaying public."
The stakeholder groups intend to work together during the deliberation of any tax reform bill to ensure consideration of the group recommendations.
No Change in 2017 to First-Year Vehicle Depreciation Limits
The first-year depreciation deduction limits for owners of vehicles placed in service this year will remain $11,160 for passenger automobiles and $11,560 for trucks and vans, the Internal Revenue Service said.
The first-year depreciation levels announced March 24 in Revenue Procedure 2017-29 reflect provisions of the 2015 Protecting Americans from Tax Hikes Act, which raised the first-year depreciation by $8,000.
The limitation for vehicles for which the bonus depreciation deduction doesn't apply remains at $3,160 for passenger vehicles and $3,560 for trucks and vans, the IRS said.
The guidance also provides lessee inclusion amounts for automobiles, vans and trucks placed in service or leased in 2017. Rev. Proc. 2017-29 is scheduled for publication April 3 in Internal Revenue Bulletin 2017-14.
Private Debt Collection of IRS Debts Set To Begin
The IRS's private debt collection program is set to begin this week, with four private companies trying to collect overdue taxes on the government's behalf.
The IRS debt collection program is a new version of a program established in 2006 that was shut down in 2009 because it wasn't profitable. The new program was mandated by Congress in the 2015 Fixing America's Surface Transportation (FAST) Act, and the agency is under pressure to make it work this time around.
According to National Taxpayer Advocate Nina E. Olson, the IRS has significantly reduced oversight in order to bring down costs. In addition, she said that the rollout of the new program will be deliberately small to allow the IRS to identify any issues that might result, such as a data breach. This type of methodical process doesn't only help the IRS, Olson said. One would think the private debt collectors "wouldn't want a bad experience right out the gate either," she said.
Bill Banowsky, the IRS's private debt collection program leader, said the agency learned several lessons from the first iteration of the program. The IRS needs to ensure that taxpayers are confident they are actually speaking to a private debt collector, not an impersonator, and the agency has taken steps to address this issue, Banowsky said.
"We also learned that it's important for us to share enough information with private collection agencies so that they can work the case to completion," Banowsky said. One of the main roadblocks to the success of the first program was the constant back-and-forth with the private collectors so that they could get approval to access certain information, he said. The agency is now able to share those details to expedite the resolution of a taxpayer's account, he said.
In terms of other changes under the new program, Olson said that taxpayers who have open cases with the Taxpayer Advocate Service have been taken off of the private debt collection list. The taxpayer advocate handles all aspects of those cases, including debt collection, she said. Those services are free for the IRS, whereas the agency has to pay for private companies to do the same job, she said.
Under the private debt collection program, the IRS is able to retain 25 percent of the amount collected by the private collection agencies to pay for the cost of the program. That doesn't include what the companies are paid because they get their own 25 percent slice. The IRS also keeps another 25 percent for personnel hiring and training related to tax compliance.
The National Treasury Employees Union isn't optimistic about the program's potential. "Every time this has been tried before, it has failed," said NTEU National President Tony Reardon in an April 4 statement. "But once again Congress has forced this policy on the IRS, and we expect the results to be the same: collection agents getting paid to harass taxpayers, many of whom need assistance, not threats."
The 2006 program was projected to bring in $2.2 billion in new revenue, but data from the IRS showed that the program resulted in a net loss of almost $4.5 million to the federal government, after subtracting $86.2 million in program administration costs and more than $16 million in commissions to the private collection companies, according to NTEU.
IRS Student Loan Tool Hacked, Taken Off-Line
The personal information of more than 100,000 taxpayers may have been compromised in a criminal breach of the IRS's student loan data retrieval tool, Commissioner John Koskinen said April 6. He said the IRS paid out about $30 million in fraudulent refunds requested on 8,000 returns before the breach was detected and the tool taken down.
The tool lets students and families access information they need to file the Free Application for Federal Student Aid (FAFSA). The tool will be down until October when improvements will be ready, but students can still file the FAFSA and enter information by hand in the meantime, Koskinen said.
