Monday, December 3, 2012

Guest Blogger: IRS Future on Display at the AICPA Tax Conference

By Julia Rogers, CPA
Rogers & Associates

The American Institute of CPAs (AICPA) Tax Conference, held last month in Washington, D.C., boasted several speakers from the U.S. Internal Revenue Service (IRS) who discussed the future of the organization. Here’s what they talked about:

IRS Taxpayer Advocate Nina Olson talked about her office’s decline in case inventory, which she attributed to declines in new homebuyer credit cases and acceptance of new cases.

IRS Commissioner Faris Fink discussed small business/self-employed (SBSE) taxation. He says the next big focus will be on partnerships, with particular attention paid to basis and other advanced issues. That project is in the planning stage now and will be in effect in 2014.

Fink also discussed the National Research Project (NRP) audits, which are shifting into new areas of focus after the completion of the 2008–2010 employment tax research cycle. Corporate NRP audits have been reduced from a three-year cycle to a one-year cycle.

According to Fink, offers in compromise are skyrocketing, with a 121 percent increase over the past four years. The IRS is attempting to reduce inventory by providing less stringent criteria for simple wage cases.

Peggy Bogadi, the IRS’s director of submission processing, talked about filing, refunds and the challenges of legislation that will come from the lame-duck Congressional session. More than 80 tax forms and schedules will have a change from 2011.

Bogadi also discussed:
  • The alternative minimum tax (AMT), which is set to cover many more taxpayers. Forms are currently programmed assuming a patch will be passed.
  • IRS Form 1040, which will now only be accepted via modernized e-file (MeF). Legacy data continues to be phased out as IRS Form 940 and 1041 filings will move to MeF for 2012, while the IRS continues to work on Form 1040X.
  • Identity theft, which is causing major problems for the 2012 filing season as 600,000 taxpayers will need personal information numbers (PIN) to file their tax return and process refunds.
She said that guidance will be issued soon on the Individual Taxpayer Identification Number (ITIN) application process.

Outgoing IRS Commissioner Doug Shulman discussed his tenure at the agency, citing the following as his key accomplishments:
  • Foreign investment issues
  • Better relationships with taxpayers and advisors
  • Technology upgrades
  • The Registered Tax Return Preparer (RTRP) and Preparer Tax Identification Number (PTIN) programs
  • The agency’s data analysis of preparers and possibly fraudulent refund claims
  • The Real-Time Tax System, which remains in process
  • Customer satisfaction, which is up to 73 percent, a 41 percent change since 1998
Carol Campbell, director of the IRS’s Return Preparer Office (RPO), talked about the agency’s PTIN program, which oversees 730,000 PTIN holders nationwide. She said a searchable PTIN database will be available next year once all testing is complete.

Campbell noted that compliance checks for continuing professional education (CPE) requirements are not yet in place, meaning that CPE compliance remains on the honor system. She said that less than 5,000 preparer visits will take place this tax season, two-thirds of which will take place over the phone. Preparers found to have issues will be required to take additional CPE.

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