The tax community is in terra incognita as the IRS braces for the impact of the coronavirus pandemic.
The IRS didn’t respond to a request for comment about how it’s implementing the Office of Management and Budget’s governmentwide orders March 17 for federal departments and agencies to reduce interpersonal exchanges, realign non-mission-critical activities, and increase communications with the public about how service levels will be affected.
That silence is a problem for taxpayers and the tax community that supports their interactions with the IRS, according to Mark Mazur of the Urban-Brookings Tax Policy Center.
“We’re in uncharted territory,” he said, adding that “things are so uncertain right now that nobody knows” how tax administration will be affected by the crisis.
The IRS has clarified in Notice 2020-17, 2020-15 IRB 1, the 90-day tax payment extension announced March 17 by Treasury Secretary Steven Mnuchin, but Mazur noted that there has been no official statement about the status of taxpayer assistance centers, volunteer income tax assistance sites, or tax counseling for the elderly.
Nor has there been any official indication of the status of IRS facilities with large concentrations of employees, whose workplace and personal health situations might affect tax administration, Mazur said.
“This will be a test of the IRS,” he added. “There are hundreds of facilities, with probably hundreds of workers each in a lot of places, and they need to get that down to a really small number.”
Big Money?
“This is not going to be an easy adjustment for the IRS or for taxpayers,” said former IRS Commissioner John Koskinen (2013-17).
The Trump administration is supporting a $45.8 billion emergency funding request that includes $241 million in fiscal 2020 for the IRS to improve taxpayer services in the extended tax payment season, provide new forms, enhance technology to interact with taxpayers, and create a manual process for the proposed paid leave tax credit.
“I’m sure that [$241 million] is a number that seems big,” Mazur said. “And if it’s not big enough, they’ll come back and ask for more.”
Koskinen said the $241 million would barely cover scheduled IRS employee pay raises. “It’s not as if by itself it represents $241 million in net additional funds,” he said. “But it’s a big improvement over a flat or reduced budget.”
Opening the Mail
Koskinen suggested that the IRS’s coronavirus response is similar in some ways to a government shutdown. “For example, some IT people are going to have to be there to deal with any glitches, as people continue to file returns,” he said.
The former commissioner said the IRS has a big advantage over many agencies because many employees and workplaces can be adapted for telework.
Regulations can be written remotely, “less efficiently, but it could still happen,” Mazur noted.
“The question is, how do you treat employees who are, in effect, shut down and not working?” Koskinen said.
Whatever the budget situation, the IRS will need to implement coronavirus protections in workplaces where potential exposure is almost unavoidable. “Obviously someone’s got to open the mail,” Mazur said. “That’s got to be done by human beings.”
Training and onboarding new employees will need to be postponed or eliminated, Mazur said.
Koskinen said, “To the extent possible, while in-person contact with the public is cut off, you would like to keep as many call center employees working as possible.”
However, call center employees and any IRS workers who depend on computers will need IT support, Koskinen added.