January 2020 IRS NPL Update

By NCCPAP Staff posted 01-29-2020 12:25 PM

  

Topics Include: Enterprise Risk Management, Electronic Signatures, New Director for the Office of Professional Responsibility, and Taxpayer First Act Meetings.

Immediate Past President and current Tax Chair, Stephen Mankowski, CPA, recently attended the January 2020 IRS NPL and Taxpayer First Act meetings.

Mark Your Calendars
Tax filing season opens on January 27, the 14th annual Earned Income Tax Credit (EITC) Awareness Day is January 31, and the IRS Budget (2021) will be unveiled on February 2. Regarding the budget, the IRS is already in the hole due to recent pay raises and other inflationary factors. EITC and Additional Child Tax Credit refunds are on hold until mid-February. Other refunds will not be available until the first week of March.

Dates for the 2020 Nationwide Tax Forums have been released and expanded; registration begins in March. The IRS is continually working to improve speakers and topics with an emphasis on cybersecurity awareness.

Three of the Forums will be targeting a Spanish speaking audience—Orlando, Dallas, and San Diego. Commissioner Rettig spoke at all five Forums last year and is committed to speaking at all six this year. The Taxpayer First Act will definitely be a strong topic for the Commissioner given that the IRS committee will be reporting to Congress this coming July.

Enterprise Risk Management (ERM) Office
ERM works with all business units to manage risk, including cybersecurity and reporting. Liaisons from each group converse with the ERM office and meet annually to oversee the efforts. This keeps all business units engaged in trying to identify risk and communicate to ERM. The Office also looks to determine if there are any commonalities of risks across the IRS. Once the Executive Risk Committee identifies the greatest risks, the ERM works to develop the accountable parties to identify and report on the risk indicators. Currently, the ERM is working with the Taxpayer First Act Office to work through what the IRS is looking to implement and the impact (positive or negative) on the overall risk.

New Internal Revenue Manual (IRM) on Electronic Signatures
The IRS is looking at using e-signature in forms submitted to the IRS, in addition to Form 8879.

The new standards are designed to protect the IRS, the taxpayer and tax practitioners. Many different methods have been created without one overriding policy. The intent was to have a single policy covering all circumstances and consisting of these five components:
  1. Acceptable form of signature – signature, check box, etc.
  2. Intent to sign – signer knows why and can’t disavow the signature
  3. Association of signature to record – signature can be associated to specific form (i.e. no cut & paste)
  4. Integrity of signed record – can’t be modified unless signer wants to change, withdraw, etc.
  5. Identification & authentication of signer – set by NIST standards; there are three levels of standards associated with risk and harm if someone impersonates themselves as another:
    • Subcomponents associated with signer
    • Attributes adequate to say that this is the signer
    • Signer is in fact entitled to the identity

Office of Professional Responsibility (OPR)
Sharyn Fisk was introduced as the new Director. She is working on the reconciliation between her views as a practitioner and how things occur in OPR. There are a number of openings due to hiring aspects within the IRS; the openings are being reclassified and will hopefully be finalized by the end of Spring. There are currently 19 people on staff and this number can increase to 27 plus the Director. Regarding Electronic Case Management (ECM), the OPR is now able to access and increase effectiveness within this pilot program. Other areas of focus include updating Circular 230, speeding up counsel after TCJA, dealing with referrals more quickly, administrative decisions, legislative matters, and outreach.

Taxpayer First Act Meetings
The IRS has been holding meetings over the last four months and NCCPAP has participated in most of them. The purpose of these meetings is the overall restructuring of the IRS as called for under the Taxpayer First Act. At the last meeting in Washington DC, Commissioner Rettig opened the meeting with some overall comments about how the IRS is looking at the Taxpayer First Act as a clean slate to restructure the IRS.

It’s always good to keep in mind that 96% of government funding comes through the IRS. 83.6% is from voluntary compliance rate ($356 Trillion). As little as a 1% in upswing can mean an additional $35.6B additional funds.

The IRS is not strictly a brick & mortar operation. It’s people. Part of how the IRS is viewing the Taxpayer First Act is to improve the customer experience. As such, they view every employee as a customer service representative. You are encouraged to submit your suggestions for the IRS restructuring to tfao@IRS.gov. The IRS will review all submissions; however, they don’t have the ability to respond to each submission.

The next NPL meeting is scheduled for February 13, 2020.


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