Legislative / Regulatory | Tax | Taxation

Which comes first — tax reform, or IRS reform?

Tax season is coming to a close. Will tax reform be on its heels?

All signs point to “yes.”

Meaningful reform of our nation’s tax code seems to come around every 32 years or so. The Internal Revenue Code of 1954 tried to clean up the then-bloated U.S. tax code. Three decades later, Ronald Reagan and Tip O’Neill crossed party lines to do the same thing with the Internal Revenue Code of 1986.

And here we are in 2017, some 31 years laters. We have a Republican president who has promised us tax reform, a Republican-led Congress in (seemingly) lock-step behind him, and a tax code that is, according to the Tax Foundation, more than 10 million words in length. By comparison, the Bible tops out at 773,692 words.

In other words, all of the tax reform stars are aligning.

But what will tax reform look like in a political environment as divisive as ours?

The probable answer lies somewhere between “messy” and “unknown.”

While tax reform remains a mystery, a number of tax-focused organizations have some very specific ideas of what IRS reform should look like — and it starts with vastly improved customer service.

The American Institute of CPAs and eight other organizations that represent tax practitioners have released a series of recommendations for how the IRS can improve the services it offers to taxpayers and tax professionals alike. Among those recommendations are:

  • setting and maintaining consistent priorities and strategic direction;
  • re-establishing the annual joint hearing review by the Joint Committee on Taxation;
  • requiring the Joint Committee on Taxation to provide a bi-annual report;
  • requiring a Government Accountability Office review of the IRS Oversight Board;
  • enabling the hiring of qualified and experienced professionals at the IRS;
  • determining the appropriate level of service and compliance they want the IRS accountable to provide and dedicating appropriate resources for the agency to meet those goals; and
  • gauging performance with customer satisfaction surveys.

“Also recommended is a new, dedicated ‘executive-level’ practitioner services unit within the IRS that would centralize and modernize the IRS’s approach to all practitioners,” the AICPA reports. “The groups explained that over time, the IRS has established a number of functional departments. As a result, IRS employees are dispersed across the IRS and are not coordinated in a way that enables practitioners to timely access critical information (such as their clients’ account status or the availability of dispute resolution opportunities). Nor do the current IRS teams or processes systematically solicit, gather or evaluate practitioner feedback, they charged.”

Given the woeful state of IRS customer service — by some estimates, the number of taxpayer calls the IRS actually answers plummeted from 87 percent in 2004 to 53 percent in 2016 — the time has come for some drastic action, the organizations believe.

“The current degradation of the IRS taxpayer services is unacceptable,” the report states. “… Enhancing the relationship between the IRS and practitioners would benefit both the IRS and the millions of taxpayers served by the practitioner community.”

The question now is: Will the IRS listen?

The organizations that contributed to the recommendations included the following:

  • The AICPA
  • alliantgroup, LP
  • Crowe Horwath, LLP
  • The National Association of Enrolled Agents
  • The National Association of Tax Professionals
  • The National Conference of CPA Practitioners
  • The National Society of Accountants
  • The National Society of Tax Professionals
  • Padgett Business Services

Bill Sheridan