Texas CPAs Offer Suggestions for Taxpayer First Act Implementation

October 14, 2019

The Honorable Charles P. Rettig
Commissioner of Internal Revenue
Internal Revenue Service
1111 Constitution Avenue
Washington, D.C. 20224

RE: Please Engage the Tax Professional Community in Implementing the Taxpayer First Act

Dear Commissioner Rettig:

The Texas Society of Certified Public Accountants (TXCPA) is a nonprofit, voluntary professional organization representing more than 28,000 members. One of the expressed goals of the TXCPA is to speak on behalf of its members when such action is in the best interest of its constituency and serves the cause of the CPAs of Texas, as well as the public interest. TXCPA has established a Federal Tax Policy Committee to represent those interests on tax-related matters. The committee has been authorized by the TXCPA Board of Directors to submit comments on such matters of interest to the committee membership. The views expressed herein have not been approved by the Board of Directors or Executive Board and, therefore, should not be construed as representing the views or policies of the TXCPA.

We write to offer our assistance in implementing the Taxpayer First Act of 2019. We believe the act's provisions can be implemented more effectively with ongoing substantive practitioner and public input as the IRS develops its plan of action.

We anticipate the implementation of the act will inevitably have a significant impact on the effectiveness and efficiency of tax administration. If the IRS would provide substantive details on its plans and consider comments from tax practitioners and the public during development and prior to implementation, it is more likely that the transition would be successful. Tax professionals are in a unique position to assist taxpayers with understanding and voluntarily complying with the tax law, providing an essential link for taxpayer compliance. We have great experience in advising clients on various tax issues and have a responsibility to help make the tax system work efficiently and effectively. Therefore, it makes sense to obtain practitioners' input up front before investing resources in developing and implementing new procedures. We recommend seeking input from the viewpoint of practitioners to help identify potential problems before implementing new procedures.

The following are just a few examples where tax professionals such as the TXCPA might be included in the process to assure simple, fair and efficient procedures:

• Title I — Putting Taxpayers First

  • Subtitle A — Independent Appeals Process 

    • Section 1001 establishing the IRS Independent Office of Appeals

  • Subtitle C — Sensible Enforcement

    • Section 1203 regarding property seized by the IRS and how that would apply in community property states (such as Texas)

    • Section 1204 regarding additional requirements for the issuance of a John Doe summons

    • Section 1205 regarding referral of tax debts to private debt collection agencies

  • Subtitle D — Organizational Modernization

    • Section 1301 modifying the reporting requirements of the National Taxpayer Advocate

    • Section 1302 requiring Treasury to submit to Congress a comprehensive plan to redesign the IRS organization

• Title II — 21^st Century IRS

  • Subtitle A — Cybersecurity and Identity Protection

    • Section 2007 regarding the notification to taxpayers of identity theft

• Title III — Miscellaneous Provisions

  • Subtitle B — Provisions Relating to Exempt Organizations

    • Section 3101 making electronic filing of returns by tax-exempt organizations mandatory

Without involving taxpayers and practitioners in implementing these initiatives, the IRS may be inefficiently prioritizing the use of its resources, which have clearly been adversely affected by the history of budget cuts and inadequate funding. By seeking a collaborative process, together we can help the IRS use its resources wisely to develop tools that taxpayers and/or tax practitioners need and will use.

In implementing cybersecurity measures, we are aware of the dual challenge to become up to date with existing technology while protecting taxpayer privacy. We appreciate recent efforts to make IRS e-Services and other tools work using programs other than Internet Explorer, such as Firefox and other browsers. However, we continue to be concerned about inconsistency in performance, vulnerability to potential security attacks and other limitations.

The IRS has recently limited its communications with tax practitioners by fax and other methods, citing security concerns. However, since the Transcript Delivery System is not always available, and many taxpayers' information is unavailable through e-Services (e.g., when there has been a death of a taxpayer or an attempt to steal a taxpayer's identity), this severely limits tax practitioners' ability to promptly evaluate the issues and provide necessary support to resolve tax controversies quickly and efficiently for the taxpayer and the IRS, putting taxpayers at risk of missing deadlines, causing increased penalties and interest they may have difficulty paying, and further delaying their getting back into compliance.

We wholeheartedly support initiatives you have discussed in meetings with practitioners regarding improved telephone technology and the option to leave a callback number rather than requiring taxpayers and tax practitioners to remain on hold, many times only to receive a “courtesy disconnect” once the hold period limit has been reached. Such an option should be added as soon as the IRS can ensure that callbacks will occur (noting here that practitioners have reported a decline in callback responses across many divisions of the IRS, due to budget cuts creating work overload for IRS personnel).

We also specifically refer to a letter we sent on May 8, 2017, to Secretary Mnuchin and Commissioner Koskinen, copy attached, that includes thoughts that may be helpful in the process of implementation of the act.

The future of federal tax administration is important to taxpayers and tax practitioners, as well as the IRS, and we encourage you to seek input from the Texas Society of CPAs and other tax professional organizations.

We would be pleased to discuss them further if you or your staff members believe it would be helpful. Please feel free to contact me at 832-333-7431 or ddonnelly@cricpa.com; or TXCPA Staff Liaison Patty Wyatt at 817-656-5100 or pwyatt@tscpa.net.

Sincerely,

David P. Donnelly, CPA
Chair, Federal Tax Policy Committee
Texas Society of Certified Public Accountants
Dallas, TX

Attachment:
TXCPA letter dated May 8, 2017, asking Treasury and the IRS to expose the Future State Plan for public comment