IRS

Why the IRS Is Still Doing Data Entry By Hand

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Young businessman sleeping on the keyboard in the officeFive recommendations are offered to improve processing. Start with scanners.

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By CPA Trendlines Research

Here’s something you’d better explain to your tax clients, lest you get blamed:

MORE: News on IRS Is Maybe Sort of a Little Bit Good | Why We All Hate the Tax Code | How Bullish Are You This Tax Season? | Accountants’ Top Problems for Tax Season 2023 | Tax Season 2023: Better or Worse?
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Should the IRS Create a Free File App of Its Own?

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Three ways to fix the program.

By CPA Trendlines

Here’s something weird: The IRS offers the vast majority of taxpayers the option to use the Free File program to prepare returns.

MORE: IRS Audit Rates Are Dropping, and Big Earners Couldn’t Be Happier | Six More Ways to Fix the IRS | Is Remote the New Normal? | Accounting Pros Face Challenges in Turbulent Times | Your Tax Season Success Plan Starts Here, Now | Tax Prep Fintech Startup: April Raises $30 Million | Accountants Agree: The Top Five Ways to Fix the IRS

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It costs taxpayers nothing. Yet only three percent use it. Can it be fixed? Should it? Congress is weighing in.

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Accountants Agree: The Top Five Ways to Fix the IRS

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The United States of Frustration: Schaffer, Zulager, Toye, Devine. (Word cloud: CPA Trendlines Research)

Some suggestions: Burn it down and start over. Abolish the income tax altogether. Privatize it.

By CPA Trendlines Research

If the CPA Trendlines Busy Season Barometer were a thermometer, it would be popping its mercury with responses to “How would you fix the IRS?”

See: IRS Tops List of Busy Season Problems

We’re getting a lot of comments, many of them scorchingly hot. Accountants and tax preparers are not happy with the government agency that their profession depends on more than any other.

MORE BUSY SEASON ’22: Survey: Big Worries for U.S. and Small Business  |  Working Harder for Every Dollar  |  For a Few: Why Busy Season 2022 Beats 2021 |  Can the R&D Tax Credit Be Used to Offset the AMT?  |  21 Reasons Tax Clients Fire Accountants  |  Unhappy about Tax Season?  |  Individual Tax Refunds Up 13%  | Shut Down the Tax Charlatans   | Eight Quick, Easy Ways to Fix IRS Filing   |  A Tax Season Worse than 2021?  |  16 Traits of the Best Tax Clients  | IRS under COVID: Heroes or Goats?

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The top five most common recommendations:
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IRS Tops List of Busy Season Problems

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Forget COVID. The underfunded, understaffed, underequipped, underappreciated, misunderstood IRS is the top problem.

By CPA Trendlines

It probably won’t surprise you that the CPA Trendlines Busy Season Barometer identifies IRS operations as the biggest problem tax practitioners face today. In fact, we’ve never seen such widespread agreement among respondents—an astonishing 80 percent of them.

MORE in TAX: Shut Down the Tax Charlatans | Tax Pros Preparing 46 Percent of E-filings | Eight Quick, Easy Ways to Fix IRS Filing | For a Few: Why Busy Season 2022 Beats 2021 | A Tax Season Worse than 2021? | 16 Traits of the Best Tax Clients | Six Fixable Problems at the IRS | IRS under COVID: Heroes or Goats? | IRS Launches 2022 Season with “Strong Start” | Two Big (and Obvious) Ways IRS Could Work with Practitioners | Imagine a Fully Online IRS | The Real Cost of Interstate Sales Tax | IRS At Death’s Door? | Beyond Tax Prep: The Big Cha-Ching! | Crisis at the IRS | The IRS’s 10 Biggest Problems | Fear and Loathing for Tax Season ’22

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That consensus indicates that there really is a problem at the IRS. It’s underfunded, understaffed, underequipped, and, at this point, underappreciated and misunderstood.

The real problem is that the problem is creating problems. IRS staff can’t keep up with correspondence, yet the computers, even though working off an operating system that dates back to the Kennedy administration, keep churning out moot notices and undeserved penalties.

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Tax Pros Preparing 46 Percent of E-filings

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The crunch hasn’t hit IRS.gov yet.

By CPA Trendlines

Five weeks into tax filing season, refunds are well past the $100 billion mark and processing is clipping along merrily. Year-to-year comparisons remain challenging because of the difference in season dates: Feb. 12 to May 17, 2021, vs. Jan. 24 to April 18, 2022.

MORE: IRS Launches 2022 Season with “Strong Start”
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As of March 4, the latest data available, the agency had received 54.7 million individual income tax returns, down 1.7 percent from the same week in 2021. It had processed 53.1 million returns, up 8.3 percent. We always look at how quickly the returns coming in are processed, and right now that rate is 96.9 percent.
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Eight Quick, Easy Ways to Fix IRS Filing

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Well, “quick” and “easy” on paper. In real life at the IRS, it’s different.

By CPA Trendlines

There’s always room for improvement—even (or, especially?) at the Internal Revenue Service.

For one thing—or really eight things—the process of filing returns could stand a little fine-tuning.

The only problem is, changing some parts of the process require changing the Tax Code, and that requires Congressional legislation, and that requires…well, no one really knows.

MORE TAX: Imagine a Fully Online IRS | The Real Cost of Interstate Sales Tax | IRS At Death’s Door? | Beyond Tax Prep: The Big Cha-Ching! | Crisis at the IRS | The IRS’s 10 Biggest Problems | Fear and Loathing for Tax Season ’22 |  Padar Joins VC-Backed Tax Fintech for Banks |  COVID Chokes an Already Crippled IRS | Tax Regs for the Metaverse | 10 Steps to a Superior Tax Department | Accountants Critical of Competitor Price-Cutting |  Automate Busy Season with Apps You Already Use | Sales & Use Tax Costs Are Higher than Anyone Thought | Survey: Nobody Loves the Wayfair Decision | Busy Season Forecast: More Chaos  | A Woman Named Wanda Leaves an IRA Nightmare  | Are You Under-Pricing Your Client Accounting Services?  | Your Best Advice: Get Smart, Get Tech, Get Moving | Worries for Small Business Clients |

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Here are the eight problems with the process of filing tax returns identified by the Taxpayer Advocate Service—and just as many simple solutions.

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For a Few: Why Busy Season 2022 Beats 2021

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One in four tax practitioners say they’ve learned from last year.

By CPA Trendlines

The 2022 CPA Trendlines Busy Season Barometer isn’t turning up much optimism, but a good quarter of respondents are telling us that this year just might be better than 2021.

Judging from their comments, however, “better” seems to mean “not as bad.”

MORE: Your Sales Tax Headaches Are Only Just Beginning  |  Six Fixable Problems at the IRS   |  IRS under COVID: Heroes or Goats?   |  IRS Loves e-Filing. So Why the Barriers?  |  Two Big (and Obvious) Ways IRS Could Work with Practitioners   |  Eight Ways to Charm a Client | Plug Small Leaks Before They Become Big Floods | You’re Only as Good as Your Last Screw-Up | Four Issues with ‘Quick’ Tax Questions | When to Pick Up the Phone This Tax Season | These Five Procedures Will Simplify Your Tax Season | 11 Steps to Better Client Tax Instructions

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Out of the 577 practitioners who’ve responded so far, only five percent said that this year is “much better” than last year, though another 21 percent granted that so far it’s “somewhat better.”

But that’s compared with 47 percent who say it’s somewhat or much worse.

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Six Fixable Problems at the IRS

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And the IRS already knows what they are.

By CPA Trendlines

Tax practitioners beware: the IRS has become a mess of misinformation and missing information.

MORE TAX: Two Big (and Obvious) Ways IRS Could Work with Practitioners  | Imagine a Fully Online IRS | The Real Cost of Interstate Sales Tax | IRS At Death’s Door? | Beyond Tax Prep: The Big Cha-Ching! | Crisis at the IRS | The IRS’s 10 Biggest Problems | Fear and Loathing for Tax Season ’22 |  Padar Joins VC-Backed Tax Fintech for Banks |  COVID Chokes an Already Crippled IRS | Tax Regs for the Metaverse | 10 Steps to a Superior Tax Department | Accountants Critical of Competitor Price-Cutting |  Automate Busy Season with Apps You Already Use | Sales & Use Tax Costs Are Higher than Anyone Thought | Survey: Nobody Loves the Wayfair Decision | Busy Season Forecast: More Chaos  | A Woman Named Wanda Leaves an IRA Nightmare  | Are You Under-Pricing Your Client Accounting Services?  | Your Best Advice: Get Smart, Get Tech, Get Moving | Worries for Small Business Clients |

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It’s isn’t a complete mess, but there are problems… and solutions. We can think of six no-brainer easy fixes. READ MORE →