Taxpayers who threw out the notices they received regarding the amount of their economic impact payments (EIP) should keep an eye on the IRS website for updated FAQs addressing how to reconcile the amount of those payments on their 2020 returns.
DeLon Harris, deputy commissioner for examinations in the IRS Small Business/Self-Employed Division, said October 20 that the IRS is aware that many taxpayers didn’t keep the Notice 1444, “Your Economic Impact Payment,” that was sent about two weeks after the EIPs. The agency is looking at ways to help those taxpayers.
“We would encourage people to check out the EIP FAQs on IRS.gov later this year as we get closer to the filing season,” Harris said at the virtual UCLA Extension Tax Controversy Institute.
The IRS website currently includes a page on reconciling the EIP on 2020 tax returns that urges people to keep their Notice 1444. It adds that “the IRS will provide information on what actions you need to take when you file your 2020 tax return when they are available.”
Claudia Hill of Tax Mam Inc. raised the issue with Harris and suggested that the IRS offer an app for taxpayers to use to confirm the EIP amounts they received.
Harris said that while the IRS hasn’t planned such an app, “I think that is an excellent idea, and we will see if we can make something like that happen.”
The Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) provided for the EIPs to be sent to taxpayers in response to the COVID-19 pandemic.
Mail Backlog and Follow-Up Notices
The pandemic led the IRS to suspend sending automatic follow-up notices to taxpayers who have a balance due, but Harris said the agency is developing a plan to resume sending those notices as soon as its mail backlog is sufficiently reduced.
The CP501, CP503, and CP504 notices are sent to taxpayers with a balance due and who didn’t respond to an initial balance due notice.
Harris couldn’t provide an estimate of how much unopened mail remains, but the figure was estimated to be 11 million in June.
“We are getting back to where we need to be” regarding the mail, Harris said.
At SB/SE, no automated levies are being issued at this time, Harris said. For its field operations, SB/SE resumed regular lien filing policies on October 1, but it is being careful to determine when levies and seizures are appropriate, he said.
Face-to-Face Meetings
The IRS can use WebEx videoconferencing technology to have virtual face-to-face meetings with taxpayers, but employees aren’t required to use it, Harris said. Field examiners can also make in-person visits, but only if both the examiner and taxpayer or taxpayer representative agree to a visit and if other safety requirements are met.
For one, a social distancing plan must be in place and masks must be worn, Harris said. Also, any in-person meeting must be approved by a senior-level manager.
“We want to make sure that all of these precautions are in place,” Harris said. “So far, those are not happening a lot, but they can be requested by either the examiner or the taxpayer’s representative.”
IRS employees have been just as affected by the pandemic as those outside the agency, Harris said, so the agency is willing to accommodate taxpayers who are facing tough circumstances — as long as they are communicating and cooperating with the revenue officers.
“For those that may not be cooperating for any other reason, we would continue on with the appropriate form of enforcement, whatever that might be,” Harris added.
E-Signatures and Secure Messaging
The pandemic has prompted the IRS to accelerate its use of technology in some areas, including its use of electronic signatures. It now expects to complete its project providing for e-signatures on third-party authorization forms by January 2021, according to Harris.
The Taxpayer First Act gave the IRS until January 1, 2020, to develop a uniform standard for e-signatures on forms 2848 and 8821, but that deadline is long past.
Harris said that a team led by Sharyn Fisk, director of the IRS Office of Professional Responsibility, is working to get an interim solution in place to allow for e-signatures on Form 2848, “Power of Attorney and Declaration of Representative,” and Form 8821, “Tax Information Authorization.”
“This process will allow the tax professional to obtain the client’s signature — or even a colleague’s signature — without actually meeting them in person or having to visit the post office,” Harris said.
Harris added that the IRS will build on that work when it launches a new “tax pro account” feature on its website next summer.
The pandemic has pushed the IRS to expand use of its secure messaging program as well, Harris said. The IRS campuses in Philadelphia and Brookhaven, New York, had been participating in a secure messaging pilot program for correspondence examinations, and the IRS previously announced that the pilot program would roll out to three more campuses by the end of the year.
But according to Harris, COVID has convinced the IRS to proceed in a more permanent way. The Large Business and International Division has started using secure messaging to send and receive large volumes of information from taxpayers, and the program is being rolled out to the agency’s automated underreporter operations as well, he added.
“Our hope is that we will be able to roll that out in the future to all customer-facing employees,” Harris said.