IRS in Retreat from Communities

Disappearing brick-and-mortar offices undermine voluntary compliance, raising IRS costs.

By Rick Telberg
CPA Trendlines

In case you haven’t noticed, the Internal Revenue Service has been retreating from local communities.

SPECIAL REPORT – Fixing the IRS: IRS #FAILs at Online Services Spell Problems for Professionals | Tax Accountants Fill the Breach of a Failing IRS | Beware the EZ Way Out | Can the IRS Improve Its Phone Service? | When Clients Face ‘Unreal’ IRS Audits | IRS Warns about Private Debt Collectors for Tax Season 2018  | Underfunded IRS Swamped with Problems | IRS in Retreat from Communities | Military Personnel Face New Battles at Home: The IRS | As New Economy Surges, IRS Falls Further Behind | Is the IRS Winning the Battle Against Identity Theft? | IRS Mulls Raising Fees to Cover Budget Shortfalls  |

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Today it has outreach offices in only 33 states and the District of Columbia. Private sector tax preparers are about as close to the IRS as most taxpayers can get.

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SURVEY: New Tax Law Roils Busy Season

Q: How's busy season so far?

How some savvy CPAs turn confusion into new billings.

Join the survey, get the results

By Rick Telberg
CPA Trendlines Research

The so-called Tax Cut and Jobs Act won't officially take effect until next year, but professionals are already reporting that it's causing problems and depressing their forecasts for this year's busy season results.

MORE ON TAX SEASON:  Tax Pros Keep Edge in E-Filings  |    Half of E-Filings Go Through Tax Pros | David Bergstein on Tax Season | Tax Accountants Fill the Breach of a Failing IRS | New Tax Law Roils Busy Season 2018 | Beware the EZ Way Out When Clients Face ‘Unreal’ IRS Audits | Underfunded IRS Swamped with Problems

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Early soundings from the annual CPA Trendlines Busy Season Barometer show that 30% of practitioners are finding more trouble this year than last year – and they blame it on the new tax law.

To be sure, many others are finding new opportunities instead, and each firm, practice, and book of business is being affected differently.

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Military Personnel Face New Battles at Home: The IRS

Tax professionals have a special duty to help. 

By Rick Telberg
CPA Trendlines

"Thank you for your service" isn't enough.

SPECIAL REPORT – Fixing the IRS: IRS #FAILs at Online Services Spell Problems for Professionals | Tax Accountants Fill the Breach of a Failing IRS | Beware the EZ Way Out | Can the IRS Improve Its Phone Service? | When Clients Face ‘Unreal’ IRS Audits | IRS Warns about Private Debt Collectors for Tax Season 2018  | Underfunded IRS Swamped with Problems | IRS in Retreat from Communities | Military Personnel Face New Battles at Home: The IRS | As New Economy Surges, IRS Falls Further Behind | Is the IRS Winning the Battle Against Identity Theft? | IRS Mulls Raising Fees to Cover Budget Shortfalls  |

More at taxtrendlines.com

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Active duty service members have plenty to worry about. In addition to the MREs, IEDs, and RPGs, there’s the IRS. Like all American workers, military personnel, including those in combat zones, have to pay taxes, but calculating what they owe can be as complicated as patrolling the streets of Mosul. A good tax preparer might be able to help these 2.1 million active duty, Reserve, and National Guard, but it takes a little extra training.

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As New Economy Surges, IRS Falls Further Behind

 

IRS caught unprepared for the tectonic shift in the income-tax landscape.

By Rick Telberg
CPA Trendlines

The gig economy is big and getting bigger. It’s service providers are making real money, but they’re often as lost as an Uber driver with a dead phone.

SPECIAL REPORT – Fixing the IRS: IRS #FAILs at Online Services Spell Problems for Professionals | Tax Accountants Fill the Breach of a Failing IRS | Beware the EZ Way Out | Can the IRS Improve Its Phone Service? | When Clients Face ‘Unreal’ IRS Audits | IRS Warns about Private Debt Collectors for Tax Season 2018  | Underfunded IRS Swamped with Problems | IRS in Retreat from Communities | Military Personnel Face New Battles at Home: The IRS | As New Economy Surges, IRS Falls Further Behind | Is the IRS Winning the Battle Against Identity Theft? | IRS Mulls Raising Fees to Cover Budget Shortfalls  |

More at taxtrendlines.com

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The gig economy, also known as the sharing economy, is that market of “collaborative consumption” typified by Uber, Lyft, AirBnB, Etsy, TaskRabbit, and many others. Such services are typically coordinated by a website that links customers with service providers, yielding a good deal all around: somebody gets a cut-rate service, and somebody gets the flexibility of part-time self-employment.

But that latter somebody might need somebody else to advise them on tax compliance. READ MORE →

Is the IRS Winning the Battle Against Identity Theft?

It's hard to tell.

By Rick Telberg
CPA Trendlines

The good news: Identity theft is down.

SPECIAL REPORT – Fixing the IRS: IRS #FAILs at Online Services Spell Problems for Professionals | Tax Accountants Fill the Breach of a Failing IRS | Beware the EZ Way Out | Can the IRS Improve Its Phone Service? | When Clients Face ‘Unreal’ IRS Audits | IRS Warns about Private Debt Collectors for Tax Season 2018  | Underfunded IRS Swamped with Problems | IRS in Retreat from Communities | Military Personnel Face New Battles at Home: The IRS | As New Economy Surges, IRS Falls Further Behind | Is the IRS Winning the Battle Against Identity Theft? | IRS Mulls Raising Fees to Cover Budget Shortfalls  |

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The bad news: There’s a lot of identity theft.

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IRS Mulls Raising Fees to Cover Budget Shortfalls

Shoot-Yourself-in-the-Foot Dept.: Fee creep could also increase enforcement costs.

By Rick Telberg
CPA Trendlines

Surely nothing ticks off a taxpayer more than having to pay a fee in order to pay taxes. But the Internal Revenue Service charges fees for installment agreements, offers in compromise, pre-filing agreements, and special enrollment examinations.

SPECIAL REPORT – Fixing the IRS: IRS #FAILs at Online Services Spell Problems for Professionals | Tax Accountants Fill the Breach of a Failing IRS | Beware the EZ Way Out | Can the IRS Improve Its Phone Service? | When Clients Face ‘Unreal’ IRS Audits | IRS Warns about Private Debt Collectors for Tax Season 2018  | Underfunded IRS Swamped with Problems | IRS in Retreat from Communities | Military Personnel Face New Battles at Home: The IRS | As New Economy Surges, IRS Falls Further Behind | Is the IRS Winning the Battle Against Identity Theft? | IRS Mulls Raising Fees to Cover Budget Shortfalls  |

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But are the fees high enough? The IRS thinks not.

Granted, these are fees for extra services that nobody has to participate in, but the same legal authority that applies to those “extras” could also apply to

  • filing an appeal,
  • receiving assistance from the Taxpayer Advocate Service (TAS),
  • requesting an audit reconsideration,
  • entering a closing agreement,
  • visiting a taxpayer assistance center,
  • calling the IRS,
  • receiving a communication, such as a call, letter, or notice),
  • making a payment,
  • submitting a tax form,
  • using the “where’s my refund” website, or
  • asking the IRS to withdraw a lien.

Whether the IRS ever grows so audacious may depend on whether Congress grows ever more tight-fisted with its IRS budget. Because that’s what the IRS blames its use of fees on, and if the IRS continues to need new sources of funding to operate, fee creep could become an ugly reality.

The Taxpayer Advocacy Service examined the use of fees and had nothing good to say about them. With the IRS now proposing to raise certain extant fees, the TAS warns the IRS to think twice before asking taxpayers to cough fees in order to cough up taxes. The attempt could prove counterproductive.

“The effect of IRS user fees could be more complicated than it seems,’ the TAS warns in its 2017 Annual Report to Congress. “Fees can significantly reduce uptake even among those who can afford them, perhaps by making the uptake decisions more complicated. Free services could generate goodwill, trust, and a cooperative attitude toward the IRS, which studies suggest could improve voluntary compliance…helping people comply (for free) reinforces the view that tax compliance is a civic and moral duty, whereas charging for assistance reinforces the view that compliance is just a monetary transaction which is ‘smart’ to undertake only if it makes economic sense.”

The IRS can increase fees without considering whether the relevant services generate revenue, reduce costs, or erode taxpayer rights. It does not have to consider whether a fee actually increases enforcement costs.

Due to budget cutbacks, the IRS doesn’t have much presence where the taxpayer meets up against the tax bureaucracy. Many taxpayer assistance centers are closed, and they are all closed outside of tax season. Most taxpayers who call the IRS toll-free lines never reach anybody. When taxpayers want to express their feeling about fees, it isn’t the IRS that has to hear it. Often as not, it’s a spouse, a bartender, or a tax practitioner. None of these is responsible for IRS fees, of course, but the latter can help out a little.

  • They can warn clients of possible fees.
  • They can help clients avoid fees.
  • They can opine in public with a certain authority.

The IRS does not need congressional permission to increase fees or extend them to new services. However, Congress has the power to pass legislation prohibiting or controlling fees. Unless it does so, fee creep could become a real problem. Tax practitioners, who serve on the front lines of taxation, need to be aware of what is happening.

Training Cutbacks at IRS Hurt Everybody

What you get for $87 per employee.

By Rick Telberg
CPA Trendlines

What could be more frustrating than calling the Internal Revenue Service 14 times before finally getting through to an agent—and then the agent tries to answer your question by reading a script that doesn’t answer the question?

SPECIAL REPORT – Fixing the IRS: IRS #FAILs at Online Services Spell Problems for Professionals | Tax Accountants Fill the Breach of a Failing IRS | Beware the EZ Way Out | Can the IRS Improve Its Phone Service? | When Clients Face ‘Unreal’ IRS Audits | IRS Warns about Private Debt Collectors for Tax Season 2018  | Underfunded IRS Swamped with Problems | IRS in Retreat from Communities | Military Personnel Face New Battles at Home: The IRS | As New Economy Surges, IRS Falls Further Behind | Is the IRS Winning the Battle Against Identity Theft? | IRS Mulls Raising Fees to Cover Budget Shortfalls  |

More at taxtrendlines.com

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Taxpayer frustration with IRS incompetence can serve to the advantage of tax practitioners, who by default become the only source of good information.

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