Topics Include the Overwhelming Volume at the IRS, Covid Relief Employment Tax Credits, and Tax Pro Account/Digital Authorizations.
As reported by Tax Chair, Stephen Mankowski, CPA, CGMA, who recently attended the monthly IRS Meeting.
Update from the National Taxpayer Advocate
The IRS is inundated with volume and while there are many factors contributing to this, it is overwhelming to the Service. While they are working hard to remedy this in multiple ways, the level of service is at its lowest historically, with more calls coming in daily than ever.
Hiring and training take time. It takes more than 12-18 weeks to hire and train people to answer phones and assist callers. The automated call back program has been successful, but the number of people in the cue is limited to the number of assistants available. The number of calls coming in regarding the Child Tax Credit program are exacerbating the problem.
Paper returns have piled up – there are 5.5 million Form 1040s and over 4 million business returns that have been opened but not processed. The goal is that by year end, the paper returns will be processed; however, there are an additional 4 million returns anticipated by mid-October.
The late December changes affected the 2021 filing season. The reconciliation of the EIP payments is anticipated to be fixed within the IRS computer system and they are hoping for the same with the Child Tax Credits. Furthermore, the IRS is looking to send out notices to taxpayers verifying their child tax payments. This data is expected to also be available on the IRS portal.
In summary, the IRS is beyond busy, and it’s getting even more challenging to keep up.
Covid Relief Employment Tax Credit Updates
The Employee Retention Credit is available only for qualified wages during parts of 2020 and amended into 2021. Guidance and Notice 2021-20 and Notice 2021-23 provide insight on applying the credit. Most recent guidance (in Notice 2021-49) applies to wages in the last two quarters of 2021 and addresses a few new pieces. The IRS has been attempting to correct some ambiguities relative to start-up companies and tax-exempt organizations. Depending on the timing of the filed returns, taxpayers might be required to amend prior returns to reflect the proper credit, which is claimed on Form 941-X.
Digital Authorizations & Launch of new Tax Pro Account
Tax Pro Account launched on July 18th. So far, over 37K sessions have logged into the accounts; 9,000 of these have initiated POA requests, and 3,000 of those have been fully created and authenticated.
Sessions were held during the Tax Forums with favorable feedback. The next release is set for 07/22 with email alerts for authorizations waiting or completed.
Secure Access Digital Identity (SADI) launched with respect to child tax credits with 4.1M users looking to gain credentials. SADI will be implemented into Tax Pro Account in November. The goal is that SADI will assist in allowing taxpayer authentication.
The revisions to Circular 230 are currently with the U.S. Treasury for review. Once completed, it will be released for public comments.
Thank you and please look for more topics in my next IRS update communications.
The National Conference of CPA Practitioners (NCCPAP) is a professional organization comprised of Certified Public Accountants practicing in the United States. In addition to serving as a forum for education, networking, and community impact, NCCPAP also advocates for its clients. NCCPAP influences tax administration and tax policy by regularly meeting with Internal Revenue Service representatives, state taxing authorities, and elected officials. NCCPAP members represent over one million businesses and individual clients. The organization is headquartered in Woodbury, NY. For more information visit, www.NCCPAP.org.