The American Bar Association (ABA) Section of Taxation, American Institute of CPAs (AICPA) and the National Society of Accountants (NSA) are urging lawmakers to fully fund the IRS, especially as the Service works to implement the Tax Cuts and Jobs Act. The professional associations highlighted the IRS’s strained resources as the agency moves into the filing season.
Now that congressional leaders have reached a deal to increase spending caps by some $300 billion over the next two years, here’s the big question for the tax world, how much of that might head to the IRS?
The IRS brass has only asked for a fraction of 1 percent of that — $397 million over the next two years — to help implement the new tax law. And it’s pretty clear the tax agency will get something tangible out of this deal — but how much still isn’t clear. “Leaders agreed to work with the heads of the appropriations committees to boost funding on a number of non-defense spending priorities in the 2018 omnibus spending bill and the 2019 appropriations bill beyond 2017 levels, including the IRS,” Pro Tax’s Aaron Lorenzo reports, noting that the agreement struck by leaders vowed, somewhat vaguely, to ensure “adequate funding” for both the IRS and the Social Security Administration.
ABA Taxation Section
The ABA Taxation Section highlighted several consequences of reduced funding for the IRS: reduced quality of taxpayer service, the lack of experienced personnel, and antiquated technology. Failure to provide adequate funding for these initiatives will have a long-term adverse impact on the Service and the tax system, the ABA Taxation Section cautioned.
The ABA Taxation Section also called for a permanent commissioner and chief counsel. “Both presidentially appointed positions in the Service, Commissioner and Chief Counsel, are currently filled by acting personnel. While the credentials and competence of the individuals in these acting positions are unquestioned, an agency of the size, and with the important responsibilities, of the Service requires stability of leadership,” the ABA Taxation Section told lawmakers.
The AICPA reminded lawmakers of the heavy burden the Tax Cuts and Jobs Act places on the IRS in a January 30 letter to Congress. “Considering the recent tax reform act is the largest tax rewrite in over three decades, there is a vast amount of significant revisions to the Internal Revenue Code,” the AICPA said. “Given the Service’s critical role in issuing guidance and implementing new tax laws, Congress should ensure a modern-functioning IRS for the 21st century,” the AICPA added.
The NSA also questioned if the IRS will have the necessary resources to implement the Tax Cuts and Jobs Act.
“It’s interesting to note that in the midst of one of the largest tax reform initiatives in more than 30 years, we are seeing budget cuts to the one organization responsible for establishing definitive guidance and regulations, and helping interpret provisions of the newly-created Tax Cuts and Jobs Act,” NSA President Brian Thompson told lawmakers in a January 25 letter. “Frankly, we question whether many of the estimated benefits of the Tax Cuts and Jobs Act can be realized in the absence of this much-needed IRS guidance,”Thompson said.
The NSA further expressed concern about the Service’s expected level of customer service during the filing season. “The IRS Division responsible for responding to taxpayer telephone calls estimates that it would be able to respond to only 60 percent of calls during the 2018 filing season, which is the high point of their operations,” John Ams, executive director, NSA, said.