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Rettig Says He Was ‘Pushed’ on IRS Closures Despite Safety Fears

Posted on June 25, 2020

IRS Commissioner Charles Rettig said he resisted considerable pressure to speed refund processing and reopen taxpayer assistance centers out of concern for agency employees’ safety and health.

The IRS shuttered 511 facilities, including 358 taxpayer assistance centers, after Rettig’s March 27 evacuation order in response to the coronavirus emergency, the commissioner told the June 24 meeting of the Electronic Tax Administration Advisory Committee (ETAAC), which also released its 2020 annual report to Congress.

“Personally, I got pushed heavily, on a weekly basis, for, ‘How come my constituents aren’t getting their refunds?,’” Rettig recalled. “And I’m sitting here thinking, ‘Well, where are we going to put our people in these campuses, in these particular environments? We need to get ready and protect the health and safety of our people, as well as taxpayers that we interact with.’”

Rettig said he also got personal comments asking why constituents could no longer walk into taxpayer assistance centers.

“We got pushed heavily” on generating economic impact payments (EIPs), Rettig added. The IRS started mailing EIPs, meant as temporary relief from the economic crisis resulting from the coronavirus pandemic, on April 10, he noted.

“We got pushed heavily in terms of issuing refunds for filing season,” Rettig added, without explaining where the pressure came from.

Paper filings — which account for less than 10 percent of the IRS’s individual tax return workload — created many problems because there were no employees in the agency’s processing centers to open and distribute mail, Rettig said. The IRS is reportedly dealing with an 11 million-piece backlog of mail as paper filings continue to arrive.

“Whatever your feelings are on some of that, if you have people who could not get a refund, I appreciate that and I apologize,” Rettig said. “It was my decision to shut these things down. . . . I think, overall, we had a pretty good balance.”

‘Phenomenal’ Progress

The IRS has so far processed 136 million individual tax returns, and issued about 92 million refunds totaling $255 billion, Rettig told ETAAC. About 90.8 percent of those returns were filed electronically, he added.

The IRS has also over the last 10 weeks processed about 159 million EIPs worth $267 billion, Rettig noted. But because individual payments may be intended for multiple recipients, such as parents and dependents, “the head count . . . is much larger than 159 million,” he said.

Rettig said the IRS has made “phenomenal” progress on stolen identity refund fraud, protecting $26 billion in refunds from fraud so far this year. The IRS endured 1.8 billion cyberattacks in 2016, he said.

“But when the government announces it’s making [EIP] payments to people who contact us in one of a variety of methods, obviously [there could be] a spike in fraudulent activity, too, coming in our direction,” Rettig said.

The agency is now trying to locate potential EIP recipients who don’t have a filing obligation or are otherwise staying “off the radar screen,” Rettig said.

“In this regard, we could use your help,” Rettig said, urging tax professionals to reach out directly to him or the agency’s national public liaison with leads to homeless assistance organizations and others. “We can’t get payments to people we don’t know exist,” he said.

‘We Need the Money’

The 94-page ETAAC report lays out for Congress the progress the IRS and private sector entities have made in enabling electronic tax administration, fighting identity theft, improving cybersecurity, and protecting taxpayer information. The June 2020 report also makes 16 recommendations for the agency and lawmakers.

ETAAC Chair Philip Poirier said Congress should provide funding and authority for the IRS to enforce cybersecurity standards, including new physical and technical safeguards, mandated education, training, and guidance. “The authority needs to be clear; the funding needs to be there,” Poirier said.

Geno Salo will succeed Poirier as ETAAC chair. Salo, who has worked for 25 years in the tax software and return preparation business, is also chair of the Council for Electronic Revenue Collection Advancement, which was founded in 1994 as a liaison between private industry and the IRS.

ETAAC member Jenine Hallings, who is compliance risk manager for payroll processor Paychex, asked the IRS to work with tax professionals on the Federal Trade Commission’s proposed amendments to customer privacy and security rules for financial institutions. The March 2019 amendments would require enhanced communications encryption, authentication, audit tracking, education, and oversight, the ETAAC report said.

“The impact of these changes on the tax preparation industry is unknown,” Hallings said. “With all that’s going on in the world today, ETAAC suspects a large proportion of the tax preparer community has not yet had the chance to fully absorb and reflect on the potential outcomes the proposed changes will have, making compliance challenging.”

ETAAC member Lynnette T. Riley, Georgia’s state treasurer, endorsed the IRS’s push to implement real-time validation of electronic filing identification numbers (EFINs) and preparer tax identification numbers.

The validity and integrity of EFINs and PTINs “is a key tool in preventing and resolving tax refund problems,” Riley said. “A shift to real-time access and validation of EFINs and PTINs would increase efficiency in this effort.”

Poirier made the pitch for ETAAC’s No. 1 recommendation — fully funding the IRS’s $12 billion fiscal 2021 budget request, including a fiscal 2021 program integrity cap adjustment focused on enforcement efforts.

“We know that we need the money. We know that modernization is a key enabler to helping taxpayers and improving enforcement. We know that funding is critical to that effort, and we know that there are cybercriminals and other adversaries pursuing everyone,” Poirier said.

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