Tax Update – March 2023
Tax Year Progress
- From the IRS’s perspective, there is NO March Madness. They have cleared the carryover backlog for original return processing.
- The average answer time and level of service have vastly improved to over 80% level of service.
- Taxpayers are able to respond to notices online and the IRS has been receiving them. Online payment plans have been successful with over 11K agreements secured in the first month.
- New Voice Bots are rolling out in Collections and callback features continue to be expanded.
- The IRS has begun scanning and digitizing more forms (including Form 941) and adding returns to Error Resolution, but errors are reduced and handled quickly.
- Alabama, Georgia, and California have been named as disaster states that have until October to file their returns.
- Form 1040-X (amended tax returns) still has a lot of inventory. The IRS is working to add assisters to process them. Even though more 1040-X forms are being electronically filed, the backlog is still an issue.
Small Business/Self-Employed Division Update
- Inflation Reduction Act: The IRS has developed a strategic operating plan that will be shared with the U.S. Department of the Treasury in a few weeks detailing how the IRS will be dealing with taxpayers and practitioners. This includes online accounts and digital options. Both Examinations and Collections will benefit from these changes including scanning to avert possibilities of backlogs and lost forms.
- Increased Audits: The increase in funds will focus on better ways to address issues. The enhanced data and improved compliance help the IRS to not waste funds on areas that could be handled differently.
- Hiring Continues: There are 1400 openings for Examination/Enforcement agents, as well as significant openings for Tax Compliance Officers and Campus Commissioner’s Representatives.
- Installment Agreements: Enhancements allow taxpayers to virtually name their price as long as it gets paid without default. This applies for amounts up to $250K, without additional paperwork.
- Call Volumes and Bots: 9.2M calls have been answered with payment plans set up since the Bot program started last year. A large percentage of the payment plans are for taxpayers with balances of less than $25K. The IRS will begin sending soft notices to engage the taxpayer. They are looking to issue 6-9 million letters that include a phone number for voice Bots. There will also be a QR code that links to the IRS payment landing page. Reductions or other issues will still require a live person for now.
IRS Taxpayer Compliance Burden Survey Program
The program was initiated to advance the IRS’s understanding of a taxpayer’s burden (time and cost) regarding amending an already-filed federal income tax return. All information provided will be used for research purposes only and participation is voluntary. Only those taxpayers randomly selected may participate in the study which takes about 10 to 15 minutes to complete.
The IRS then matches the survey to the actual tax return in order to build a statistical model to evaluate and validate legislative changes. It factors in filing methods, forms filed, credits claimed, and other information. Practitioners should encourage their clients to respond if they receive a survey and provide reasons why.
The IRS has been working hard over the last 20+ years on various multilingual initiatives. They continually look at Limited English Proficiency (LEP) to identify areas of concern and focus on the top five that amount to 85% of LEP returns. They also factor in taxpayer value, business value, and volume of notices. They initially identified 20 notices, then added 12 more. IRS Form 9000 allows the taxpayer to select an alternative media preference (language, visual, etc.), as well as an accessibility hotline – 833.690.0598.
Please watch for our next NCCPAP Tax Update next month!