Why it’s Time for the IRS to Modernize
It’s time to bring the IRS into the 21st Century.
That’s the overarching message in a letter from the American Institute of CPAs (AICPA) to the House Ways and Means Oversight Subcommittee after legislators recently released the “Taxpayer First Act” discussion draft.
“The AICPA supports the proposal’s provision to allow the IRS to thoughtfully consider what a modern structure for the Service might look like, to develop a plan for its implementation, and to submit such a plan to Congress,” stated attorney Annette Nellen, CPA, CGMA, chair of the AICPA Tax Executive Committee, in her April 6 letter[linkto] to legislators.
Practitioner Services Division
The IRS should include a new dedicated Practitioner Services Division that would centralize and modernize its approach to all practitioners. The division also would leverage the work of the Return Preparer Office and the National Public Liaison and would complement the work of the National Taxpayer Advocate and the Stakeholder Liaison Local Contacts.
Regulation of Tax Return Preparers
- Subject all preparers to Circular 230
- Congress should mandate that the IRS create a testing and continuing education program that would apply exclusively to unenrolled preparers. The AICPA recommends a one-time, basic 1040 entry-level exam that would ensure competency in preparing individual income tax returns, and requiring unenrolled preparers to complete 15 hours of annual continuing education.
- Limit the IRS authority to require a PTIN. While the IRS should track everyone who signs a tax return, non-signers should be excluded from the PTIN requirement if they are supervised by an attorney, CPA or enrolled agent; and the supervising professional also signs the tax returns or refund claims that the non-signer prepares.
- Congress should grant the IRS the authority to revoke PTINs.
- The Government Accountability Office should study the effect of increasing information exchanged relating to return preparers between the IRS and state taxing authorities.
Customer service must be a key IRS goal, and the agency should contact taxpayers only if it can devote the resources required for a timely resolution of an issue.
Cybersecurity and Identity Protection
The AICPA supports a single point of contact at the IRS for identity theft victims, and expanding the existing identity protection personal identification number system to anyone requesting it.
Development of Information Technology
The IRS needs a modern tech infrastructure, the AICPA states. Online accounts and portals for taxpayers and their tax preparers is crucial, and the AICPA also recommends a portal to help taxpayers who file Form 1099.
The use of electronic filing systems should be expanded. But taxpayers should be able to opt out without repercussions to the tax preparer. The IRS also should develop means to allow electronic signatures on Form 8879, focusing on the need for confidentiality of taxpayer information.