Tax Update – September 2023
Best Practices: “How to prepare for and what to do when a tax practitioner dies” (Alert No. 2023-05)
This Alert walks practitioners through the steps to establish a ‘best practices’ continuity plan for death or incapacity. Practitioners are advised to have an arrangement in place with another practitioner in their region in the event of incapacitation and continue to operate the practice until properly closed down or transitioned to another owner.
An updated inventory of open and ongoing client matters is also encouraged. It should have enough details so that an assisting practitioner would be able to quickly assess the status and work toward handling them. Clients should also be made aware of the contingency plans via some form of communication program. Once the succession plan is developed, the practitioner should share it with their family members so that they are aware of its existence and any involvement needed with the implementation.
The IRS continues to hire at many levels. Currently, 4,000 mid-level positions are open, and the IRS is looking for the best possible talent to bolster its ranks. To help speed up the process, the IRS is able to use Direct Hire Authority to allow quicker hire—in an average of 67 days. The GS-13 average salary is approximately $125K/year plus benefits, making total compensation closer to $170K/year. Once involved in a career at the IRS, there are many areas in which to move. The IRS will be at the 90,000-employee mark with the next pay period and is looking to grow. Fewer than 9000 employees are Revenue Agents, and they are looking to increase those ranks, as well.
The commissioner has many long-term goals but realizes that they cannot do it alone and desires stronger engagement with stakeholders. Between 2010 to 2022, the IRS budget has been cut each year. During that same period of time, more tasks were assigned to the IRS to support how the worldwide economy flows. By 2022, funds then became available to restructure the IRS. With funding came a new plan with the desire to make sure that ‘the word’ that is released is accurate, and that availability and communications are improved. If someone wants to reach the IRS, they should be able to reach them. That is paramount if the IRS is to be funded and the IRS needs to demonstrate this.
Scams and schemes affect the mindset of honest taxpayers. The IRS feels that the exploitation of innocent taxpayers is a consequence of underfunding; when funded, the IRS is able to act quickly. The ERC was one way to show this. There are 600K ERC claims in the queue and under review. Anything coming in through the end of the calendar year will eventually be reviewed. There are talks of the resumption of ERC in 2024 with improved rules and regulations.
Small Business/Self-Employed Updates (SB/SE)
Maha Williams will be expanding her role of Deputy Commissioner of SB/SE, as Darren Guillot recently retired from the IRS. Revenue Officers will again be performing unannounced visits and employee safety is a major concern.
Notice Redesign Taxpayer-Centric Notices Initiative 2.3
The IRS is updating notices based upon the overall needs. The taxpayer will be able to respond to notices electronically by the end of 2023 via secure messaging and/or eFax. When submitting questions and suggestions, it is advisable to include notice numbers. All submissions will be reviewed, but not necessarily replied to.
The Agency feels that it needed a single voice across the Service to develop strategies across its digital assets, and therefore a team was organized to address several areas of focus: communication, training, guidance, data & technology, and stakeholder engagement. The current team has eight subject matter experts from a variety of Business Units.
Other Related Matters:
- The IRS has issued Chief Counsel alerts on how to treat losses, charitable contributions, staking, and NFTs. They are working on official guidance and continue training the IRS workforces based on their positions.
- The Deputy Commissioner for Services & Enforcements has been at Nationwide Tax Forums to answer questions and help tax professionals find answers regarding Digital Assets. In addition, the IRS is working on revamping its website to make it more user-friendly and informative.
- Form 1099-DA regulations for digital assets are in the Federal Register as of August; there is a 60-day comment period on the proposed regulations. Comments can be posted on Regulations.gov.
Nationwide Tax Forum Update
This has been a fabulous Forum season for the IRS with about 12,000 paid attendees, which is higher than online years. The new Strategic Operating Plan was a key component. The Forums included four non-CPE sessions on areas such as WISP, practice management, town hall meetings, and taxpayer experiences.
The 2024 Tax Forum sessions are scheduled for: 7/9-7/11; 7/30-8/1; 8/13-8/15; 8/20-8/22; and 9/10-9/12 with locations to be announced.
Please look forward to our next tax update at the end of October.