IRS Commissioner John Koskinen
Photo credit: Sam Kittner/kittner.com
|Internal Revenue Service (IRS) Commissioner John Koskinen and more than 20 other government officials spoke about the challenges facing the IRS, tax preparers and taxpayers during the upcoming tax filing season, as well as tax enforcement and IRS audits, at the American Institute of CPAs’ (AICPA) National Tax Conference, which was held November 2-3 in Washington, D.C. |
“It promises to be another complicated filing season, and not just because of our budget situation,” Koskinen told the audience. “Along with protecting against stolen identity refund fraud, our efforts to prepare for the upcoming filing season once again involve the Affordable Care Act. We are preparing our systems for additional ACA changes that took effect this year. One is a reporting requirement that applies to health coverage providers and certain large employers.”
If Congress delays action on the expired tax provisions, commonly referred to as the “tax extenders,” into December or approves any new tax provisions, it could force a delay to the start of the tax filing season, Koskinen warned. “This uncertainty imposes stress, not only on the IRS, but also on the entire tax community, including everyone in this room.” He told attendees he “will continue to urge members of Congress not to let this uncertainty drag on.” (Read the story about the AICPA’s letter to lawmakers urging immediate action on the tax extenders in the October issue of The CPA Advocate.)
Koskinen said that the IRS is operating under a temporary funding bill for 2016 and that “the budget deal that was recently announced allows for an overall increase for the government for 2016 but doesn’t set individual agency levels. We hope that when these levels are set, the IRS will be one of the agencies that receives an increase.” Any funding cut for Fiscal Year 2016, coming on top of the five consecutive years of budget cuts the agency has already experienced, “would have devastating effects on taxpayers and our tax system,” he said.
In addition to the “unacceptable” level of service the IRS has been able to provide to taxpayers and tax providers because of the budget cuts, Koskinen said he is “especially concerned about the effect that the reduction in our workforce has had on audits.” In Fiscal Year 2015, the IRS completed about 1.2 million individual audits in Fiscal 2015, which is 13,700 less than the previous year, according to Koskinen. “Not surprisingly,” he said, “we’re seeing clear evidence of a longstanding decline in revenue coming from audits. Between 2005 and 2010, the revenue generated from audits averaged $14.7 billion annually. But since 2010, it has averaged only $10.5 billion a year, which is a drop of nearly 30 percent, and translates to more than $20 billion in uncollected revenue over the past five years.”
Regarding taxpayer identity theft, Koskinen said, “Another major challenge facing the IRS and the entire tax community is the need to improve our efforts to protect taxpayer information and combat stolen identity refund fraud. He said that taxpayers will have more protections this tax filing season under a two-pronged approach. It involves both improving taxpayer authentication on the front end, and obtaining more matching data so the IRS can make its fraud filters more effective at identifying and stopping false returns, Koskinen said.
IRS Taxpayer Advocate Nina Olson reiterated her longstanding support for increased IRS funding, but expressed concern about the IRS’s centralization of functions in remote locations and said the Taxpayer Advocate Service (TAS) will be exploring increasing employees or opening offices to reflect taxpayer population centers. She said the law requires the TAS to have an office in every state. She also said her staff is encountering increased resistance from IRS employees when it requests help in resolving taxpayer problems. She deemed unlawful the IRS’s recent efforts to bar her from viewing the administrative files of taxpayers her office is trying to assist.
AICPA Fall Tax Division Meeting
At the AICPA Fall Tax Division Meeting on November 4, more than 25 regulators and Congressional staff joined the volunteer members who serve on the panels and write comment letters to the Department of the Treasury, IRS and Congress in order to discuss a variety of topics important to the panels, from taxpayer identity theft to estate and gift tax issues.