This report covers the final IRS Liaison meeting for 2021 and includes updates relative to the following topics: Automated Collection System Improvements, Child Tax Credit Update, Disaster Relief, and the IRSAC Annual Report.
As reported by Tax Chair, Stephen Mankowski, CPA, CGMA, who recently attended the November IRS Meeting.
IRS Automated Collection System (ACS) Improvements
All 19 ACS call sites have answered a total of over 1.2 million text messages to taxpayers this year. The average wait time for a response is approximately 32 seconds. The lines are open from 8AM through 8PM and include a Text Chat feature that was launched in 2017. ACS has recently added bilingual support in Puerto Rico, as well as international Text Chat.
Chatbot will initially launch this week (with a full launch in January) and include the ability to answer basic information and FAQs, as well as account information and one-time payments. The Callback initiative also has a soft launch this week with a full launch in January.
To take advantage of these features, taxpayers need to have an online account and be online where they will be given an option to use Chatbot and Text Chat.
Advance Child Tax Credit (ACTC) Payments
Regarding reconciliation of payments: A reconciliation will be received on the 2021 Tax Return; however, repayment may be required if the advance amount was more than the credit.
If a taxpayer received payments for two children based on the 2020 return and they don’t claim both children in 2021, they would need to repay the excess on their return, unless protected under the law. The updated portal is available to adjust the credits based upon increased income or ineligibility. Safe harbor protection only pertains to qualifying children and is based upon Adjusted Gross Income (AGI). Schedule 8812 (Form 1040) has been reformatted to account for these payments. Any updates made to the portal by 11/29 will apply to December’s payments. The 4th release of the portal is set to be released soon. There is legislation that could extend the ACTC into 2022, but it has not been passed as of this time.
The IRS will send out Letter 6419, an end of year statement that outlines the payments received as well as qualifying children. A draft should be available soon and is scheduled to be mailed in January.
As a note of reference, the ACTC was not subject to offset. It is possible that one taxpayer could receive the ACTC based on their 2020 return and have repayment that was covered under safe harbor, while the other taxpayer, who can legitimately claim the child, can also get the credit on their 2021 tax return. Thus, there is potential for the CTC to be double paid—once as ACTC and again on the alternate parent return.
IRS Disaster Tax Relief
There are over sixty disaster events annually, but only about twenty receive IRS disaster relief. During 2021, over 100 million taxpayers received IRS disaster tax relief. Under the Stafford Disaster Relief and Emergency Assistance Act (of 1988), or FEMA, the IRS is not a ‘first responder’ for disaster and cannot provide disaster aid. The President of the United States makes the call regarding what is an emergency before and after a natural disaster occurs. Disaster relief is claimed on tax returns as casualty loss. Administrative relief refers to the IRS providing additional time to file.
IRS may provide disaster tax relief under IRC 7508A. Although it has been granted in the past, there is no guarantee that it will continue with each declaration. Relief does not apply to prior year returns. The IRS systemically codes Taxpayer Accounts for relief in disaster areas. If the area is expanded, those areas get retroactive relief.
IRS Advisory Council (IRSAC) Annual Report
The IRS Advisory Council issued its annual report, which is now available at www.irs.gov/irsac. Some highlights include:
- IRS Budget: The agency has increasing responsibility and roles, yet a reduced workforce. They are requesting a $13.2B budget in support of the budget presented to Congress, plus an additional $417M for enforcement purposes.
- Taxpayer First Act: It was a great idea and the IRS had to report to Congress to streamline Service to taxpayers. There were legislative mandates to modernize structure, including compliance.
- Appeals: There were several recommendations, including reorganization, digital services, and improvements to the IRS work force.
- Covid-19: Every office was impacted by shutdowns, working from home, reopening, and resources.
- Paper Filed Returns: The IRS is confronting this issue with authenticated chat and digital signatures, until more viable alternatives are in place.
Happy holidays and please look for my next IRS update communications in 2022!
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.