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Tax Update - September 2022

By NCCPAP Staff posted 09-28-2022 09:45 PM

  

Tax Update – September 2022

Inflation Reduction Act Updates
The Inflation Reduction Act marks a historic moment for the IRS with $80B of funding appropriated over a ten-year period. The objective is to move quickly in order to put together high-level goals on how to best use the funding. Technology improvements, as we’ve reported previously, touch every aspect of the IRS, including the following areas:

  • Services: Enhancements to the multi-channel experience, including online and other means to digitize and improve services for taxpayers and tax professionals. The IRS is also looking into a Direct File capability with a report to Congress due at the end of Q1 2023.
  • Compliance: Pulling together of enforcement areas and evaluating any potential overlap of services. The IRS is not planning on increasing the number of audits but is scrutinizing higher income individuals and businesses.
  • Human Capital: The need to hire new employees with specific skills and how to handle the onboarding and training.
  • For all of these areas, the IRS plans on extensive communications with internal and external outreach.
The funding from the Act will be guided by the initial work from the Taxpayer First Act with a report due to the Treasury Secretary in about six months.


Appeals Updates and Video
The IRS issued a news release asking for feedback and sharing documents including guidance on how to handle muting audio and portraying a professional appearance. Video conferences will remain available despite going back to in-person conferences. You can email ap.taxpayer.experience@irs.gov to give feedback and comments for improvement.

There are a significant number of cases from Tax Court in the Appeals inventory with a majority from unrepresented taxpayers. Since April, 90% have been resolved; the remainder will hopefully get resolved over the next few weeks.

Appeals conducted a Practitioner Perspective Series of 90-minute programs (for tax professionals) with the intent to better address issues between the parties. They are looking to expand this program and are looking for tax professionals to participate in future sessions.


Late Filing Penalty Relief
On August 24, 2022, the Internal Revenue Service (IRS) released Notice 2022-36 to provide penalty relief to nearly 1.6 million taxpayers that faced hardships when filing their 2019 and 2020 tax returns due to the COVID-19 pandemic. The relief is automatic and handled systemically by the IRS. This Notice applies to Tier 1 and Tier 2 penalties. In addition, there will be partial relief for returns filed after 9/30/22. The Notice does not apply to penalties not in notice or parts of settlements. First time abatement and reasonable cause relief still exist for other penalties.


2022 Electronic Tax Administration Advisory Committee (ETAAC) Annual Report to Congress
The report was issued at the end of June 2022. Advisory Committee members are comprised of all aspects of the profession, including software developers, practitioners, and other areas. The report gave the IRS credit for things they are doing well and not just what is wrong.


Please watch for the next NCCPAP Tax Update at the end of October.
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