AICPA Releases Response to IRS Website Post Regarding Taxpayer Automated Notices 

On January 27, 2022, the IRS released a statement on their website addressing the pressure to provide automated notice relief to taxpayers. The post begins by reminding readers that the IRS is dealing with limited resources and staffing issues as a result of the COVID-19 pandemic, which has caused severe delays in processing times. The IRS is looking into ways to increase efficiency by deploying new technology and shifting employees between functions. That said, the IRS still had 6 million unprocessed original individual returns as of late December, about 5 million pieces of unprocessed taxpayer correspondence, and is facing another challenging filing season in 2022.

The IRS has suspended the issuance of certain automated notices and related actions. Specifically, notices will be suspended in situations where taxpayers have been credited for payments, but the IRS has no record of a tax return being filed. In other words, the IRS likely cashed the taxpayer’s check, but the tax return is still sitting in paper inventory awaiting to be processed.

The IRS also explains in the post that there are certain notices that must be released by a specific date to conform with the statute, absent congressional action. Further, the IRS is limited in terms of making significant operational changes to their systems that would prevent certain notices from being automatically printed and mailed to taxpayers.

Following the IRS post on January 27th, the American Institute of CPAs (AICPA) released a statement acknowledging the positive first step but believing that more can be done to reduce erroneous automated notices without congressional action.

The AICPA is a member of The Tax Professionals United for Taxpayer Relief Coalition, a group that had submitted a statement with recommendations to the IRS on January 14th advocating for taxpayer penalty relief. The recommendations of the Coalition were:

  1. Discontinue automated compliance actions until the IRS is prepared to devote the necessary resources for a timely resolution
  2. Align requests for account holds with the time it takes the IRS to process any penalty abatement requests
  3. Offer a reasonable cause penalty waiver, similar to the procedures of first-time abate administrative waiver
  4. Provide taxpayers with targeted relief from the underpayment and the late payment penalty for the 2020 and 2021 tax year

In response to the January 27th post, the AICPA has reminded the IRS of these recommendations in hopes that action will be taken to reduce the burden on taxpayers receiving these notices. AICPA President & CEO, Barry Melancon, CPA, CGMA also stated that the AICPA “respectfully disagrees with the IRS’s assertion that congressional action is needed to suspend the automatic issuance of notices”.

If you have questions or concerns about what this means to you and your business, please give us a call.

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Gina Khawam
Gina Khawam

Gina Khawam is a Tax Manager for BeachFleischman. She has provided tax and consulting services for a variety of privately held companies, individuals, and nonprofit organizations since 2017.