Tax Update — June 2022

By NCCPAP Staff posted 06-23-2022 01:00 PM


Tax Update – June 2022

Nationwide Tax Forums
The 2022 Nationwide Tax Forums will be held virtually beginning July 19th, with a series of live-streamed webinars every Tuesday, Wednesday, and Thursday. Held each summer for more than 30 years, the Forum is the IRS's marquee outreach event to the tax professional community. So far, over 8000 registrants have signed up to attend.
Registration is open.

2022 Filing Season Round Up (from a Processing Perspective)
This year has been a great success year for those filing electronically. While there’s still a lot of work to do, autocorrection of errors has allowed the IRS to stay on top and close cases.

Hiring is still a major initiative for IRS. Almost 4700 offers have gone out, and so far, about 1400 individuals have been onboarded. The IRS also expects to hire 2500 temps to help fill the gap.

Last year, Error Resolution System (ERS) cases were taking about 40-60 days to process; now they only take about 3 days, even if some need manual closing. Paper returns cannot be rejected; however, they can be digitized and processed through the Modernized e-File (MeF) System. In addition, the IRS is considering 2D bar coding, but still needs to determine a way to process those returns.

Direct Deposit on Prior Year Returns
Since June 2021, the IRS had implemented a program to add direct deposit. This year, 1.2M direct deposits were issued, which is about 22% of all returns.

You can now file 1040X returns electronically not only for the current year, but also for the two prior years. Also, “where’s my refund?” is now also available for three years.

Small Business/Self Employed Update (SB/SE)
SB/SE is working on the backlog and how things flow to help them make decisions regarding notices. They are working more closely with the Wage & Investment Division (W&I) to know where things stand with enforcement and collection.

The IRS is returning to field activities beginning the end of June with Revenue Officers (for unannounced visits) and Revenue Agents. There is some understandable skepticism regarding unannounced visits, but the Officers will show pocket credentials that can be verified. Most will have received mailed notices in advance. 

Federal Tax Deposit (FTD) Alerts will start again at the end of June. Some taxpayers will get unannounced visits related to FTD Alerts, but they will now have a direct point of contact within the IRS. Nearly 1000 employees from SB/SE have been delegated to work through the backlog.

Non-filer notices were stopped earlier this year, as were liens and levies. We have no certain date as to when they will restart these notices.

Update on Bots and AI
The IRS is exploring the ability to permit Bots to execute payment agreements, including raising the dollar limits from $25K to something higher without financial statements. With authenticated Bots, they have answered 3.4M calls since the end of 2021. In addition, 1.6M text chats have aided taxpayers. Overall, this has been helping the level of service. Since mid-June, the IRS has begun using AI to approve installment agreements without errors. This feature is currently operating at a testing capacity to ensure that they are working correctly, but it is expected to increase to 50% very soon and eventually go to 100%. The Bots are running in both English & Spanish. If the Bots can handle the backlogs, it can greatly increase the level of service and open up some assisters to handle more detailed cases.

CP14 Notice is a balance due notice sent within 45 days after filing. The CP14 will tell you how much you owe and request payment within 21 days. A different channel of the IRS will soon be available to address these notices. Authenticated and unauthenticated Bots will be able to handle the payments. Five million CP14 notices have been released, so far. In late July, the authenticated Bot will be able to provide a transcript and by late September, it will be able to provide details of balances due.

New Retirement Plan Pre-Examination Compliance Pilot
This office regulates the tax side of retirement accounts. They continue to look for ways to enhance compliance. Since examinations are the costliest means of compliance, there is a pre-exam compliance pilot underway whereby cases are identified and allowed voluntary corrections. This program started in June and allows for a 90-day window to demonstrate compliance or correction. Cases can be closed without ever sending an agent. The taxpayer will have an agent to speak with to address and close their case. The IRS is using this as a learning tool for the initial pilot to determine its viability and to perfect the program.

Please Look for NCCPAP's Next Tax Update in August