The Current IRS Calamity

The Facts
Excerpted from Michael Cohn’s article in Accounting Today, July 24, 2015 issue:

The IRS budget has shrunk: from $12.1 billion in F/Y 2010 to $11.0 billion in fiscal 2014, a reduction of 9 percent.

Steeper cuts on the way: The House budget for F/Y 2016 allotted $10.1 billion—$838 million less than the current level and $2.8 billion below the Obama administration’s request. The Senate recently voted to reduce IRS funding to $10.5 billion.

Calls unanswered: The IRS answered only 37% of taxpayer calls routed to customer service representatives overall, and the hold time for taxpayers who got through averaged 23 minutes. This was a sharp drop-off from the prior year when the IRS answered 71 percent of its calls and hold times averaged approximately 14 minutes.  Call to the Practitioner Priority Service Line had a 45% answer rate, with hold times averaging 45 minutes.

Only 17% of calls from taxpayers who were notified that their tax returns had been blocked by the Taxpayer Protection Program on suspicion of identity theft were answered; hold times averaged about 28 minutes. In three consecutive weeks during the filing season, the IRS answered fewer than 10 percent of these calls.

“Courtesy disconnects” skyrocketed from about 544,000 in 2014 to about 8.8 million this filing season, an increase of more than 1,500 percent. A “courtesy disconnect” occurs when the IRS switchboard is overloaded and cannot handle additional calls.

Adjectives unprintable in this professional blog can only be used to describe this outrageous, shameful situation.

Thoughts from CPAs

One of my Chicago roundtable groups recently discussed this IRS situation at length. Their suggestions included:

• Call the National Taxpayer Advocate. Nina Olson, its leader, is in Accounting Today’s list of Top 100 Most Influential People in Accounting. 877-777-4778.
• Call your congress people. At least one practitioner got a prompt call from the IRS as a result.
• Consider telling your clients that if the IRS assesses an incorrect deficiency notice for a nominal amount – say, under $2,000 – they should pay it, because the cost of pursuing will exceed the requested amount.
• Send the IRS a follow up letter with copies of prior correspondence advising that adjustments are being made that are inconsistent with the facts and prior findings. he letter requests the IRS to put the case into the hands of one individual who can handle the situation from start to finish. It’s really a CYA letter and not one that threatens the situation in any way.

Can the AICPA get some action with Congress and/or the IRS?

The AICPA is making IRS servicing problems a top priority. But the Republican-controlled Congress will not fund the IRS more than it presently is doing. The IRS’s poor relationship with Congress is a huge obstacle these days, exacerbated by the ongoing government stalemate. The AICPA’s position with Congress is along these lines: “However angry you are with the IRS and have a right to be, there must be a way that we can all work together to come up with a solution.”

The  AICPA’s Council passed a resolution calling for a bipartisan ‎summit  to create a plan to ensure we have a 21st century IRS. The AICPA is currently in discussions with Congress, and  the IRS commissioner. But like many things in DC, the situation remains at an impasse. The political reality is that little gets done until there is compromise on other issues.

The AICPA also floated the idea of specific funding to address the service issues. The IRS opposed this idea because it prefers general funding; Congress also said no.

So, the bottom line is that no resolution is expected in the short term. Congress doesn’t trust the IRS. The AICPA thinks it may take a new administration before there is any chance of a solution.

My personal suggestion

A massive “March on Washington” by CPAs from across the country. Imagine 10-20,000 card-carrying CPAs assembling on the Mall in front of the Lincoln Memorial to protest this shameful and childish behavior by Congress. Or maybe they could camp out in all-night vigils in front of the homes of those alleged leaders in Congress who are ignoring their responsibility to lead the country responsibly?

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