IRSAC Issues 2015 Public Report

IRSAC Issues 2015 Public Report

Background

IRSAC was established in 1953 by the successor to the Commissioner’s Advisory Group which serves as an advisory body to the Commissioner of the IRS. As outlined in the Report, IRSAC’s purpose is to provide an organized public forum where senior IRS executives and representatives of the public discuss relevant tax administration issues. IRSAC’s current 20 volunteer members are comprised of members from the taxpaying public, the tax professional community, small and large businesses and the payroll community.

IRSAC currently consists of the following three subgroups:

• Small Business/Self-Employed and Wage and Investment;
• Large Business and International; and
• Office of Professional Responsibility.

In the General Report section of the Report, IRSAC explains the duties and responsibilities that it performs in working with the IRS. As discussed, IRSAC reviews existing practices and procedures, and makes recommendations on both existing and emerging tax administration issues. In addition, IRSAC suggests operational improvements, conveys the public’s perception of professional standards and best practices for tax professionals and IRS activities, offers constructive observations regarding current or proposed IRS policies, programs, and procedures, and advises the Commissioner and senior IRS executives on substantive tax administration issues.

The Report

The Report is broken down into the following four sections (by subgroup):

1. General Report;
2. Small Business/Self-Employed and Wage and Investment Subgroup Report;
3. Office of Professional Responsibility Report; and
4. Large Business and International Subgroup Report.

The General Report outlines two significant issues identified by IRSAC. First, IRSAC determined that the IRS needs sufficient funding to operate efficiently and effectively, provide timely and useful guidance and assistance to taxpayers, and enforce current law, so that the integrity of, and respect for, our voluntary tax system is maintained. IRSAC points out that financing for the Federal government depends largely on the IRS; the IRS collected 93% of all Federal receipts in the 2014 fiscal year. In the 2012 fiscal year, the IRS collected more than $2.5 trillion in revenue. However, overall funding for the IRS has decreased approximately 17% and is currently less than 2009 fiscal year levels. As a result, the IRS has scaled back its activities, instituted a hiring freeze, decreased its training efforts and reallocated resources. Accordingly, IRSAC recommends that the IRS be funded at a level no lower than the 2016 fiscal year budget requested by the Administration.

Secondly, IRSAC states that the IRS must maintain the taxpayer and practitioner protections afforded by a strong, balanced and independent office of professional responsibility due to a volatile environment. As a result, IRSAC recommends that the IRS maintain the independence, strength and visibility of its Office of Professional Responsibility.

In the subgroup reports IRSAC addresses various additional issues and, as in the General Report, includes a discussion describing the problem(s) or issue(s) and provides practical recommendations for each of the issues identified. Based on its findings and discussions, IRSAC discussed and made several recommendations in its Report on various other issues including, but not limited to, the following:

Small Business/Self-Employed and Wage and Investment Subgroup Report

1. Authentication of Forms 1040;
2. Review of automated online self-service and teletax telephone application tools;
3. Third-party payer arrangements for employment taxes;
4. Reducing taxpayer burden by improving the taxpayer experience; and
5. Review of Offer in Compromise form and Booklet 656-B, and collection information Forms 433-A, 433-B, and 433-F to improve taxpayer compliance and successful utilization.

Office of Professional Responsibility Report

1. Continuity of independence, strength, and visibility of the office of professional responsibility;
2. Statutory authority of the IRS to regulate tax practice; and
3. Application of appraisal standards consistent with the uniform standards of professional appraisal practice.

Large Business and International Subgroup Report

1. Improving penalty administration — general comments and recommendations;
2. Penalty for erroneous claim for refund or credit executive summary;
3. Application of qualified amended return rules to regularly examined taxpayers in a post-CIC environment;
4. International information return penalties; and
5. Implementation of the tangible property regulations.

Conclusion

Taxpayers should be aware of IRSAC’s concerns and recommendations so that they are informed of potential changes that may impact future filings with the IRS. As the tax law is constantly changing, the significance of IRSAC is heightened to be sure that the IRS is also evolving and looking out for the taxpayers’ best interests.

2015 IRSAC Public Report

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