“Perhaps the most telling indicator of taxpayer confusion over the code’s complexity is that today, 90% of individual taxpayers pay for professional tax preparation or tax software to prepare their tax returns. IRS research estimates that, over the past 10 years, the burden for the typical taxpayer has increased by about 20% and would likely be even more if they had to prepare returns themselves without any aids or tools. Moreover, we estimate individual taxpayers and businesses spend more than 7 [billion] hours each year complying with filing requirements.” [Tax-News via Tax Foundation]
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The IRS Is Making “Thousands” of Visits to CPAs During Tax Season
Apparently the IRS is not one for timing. Earlier this month the Service announced that if you get paid to crank out 1040s, your life as you know it is more or less over. Well, at least a little more inconvenient. Okay, it’s hella-inconvenient.
Back when the new regulations were announced the Service let it be known that since it can’t get these new regulations implemented for 2010, it was still stepping up its efforts for getting all up in tax preparers’ shit.
The first step being to be to send 10,000 letters to paid preparers nationwide letting them know that they need to be on their A-game. The letters were intended for, “preparers…with large volumes of specific tax returns where the IRS typically sees frequent errors,” and that they should be “vigilant” for errors related to “Schedule C income and expenses, Schedule A deductions, the Earned Income Tax Credit and the First Time Homebuyer Credit.”
Well then. That should cover about EVERY TAX PREPARER IN THE COUNTRY.
Anyway, the IRS is following up the 10,000 “Dear Joe Kristan” letters with phone calls to set up sit-downs with “thousands” of preparers. According to William Stromsem, who wrote a piece over at CPA2Biz, these are “urgent” calls:
In at least one case, the IRS called a practitioner at home and spoke with the spouse by name, asking for a response within three hours and then calling back before that time was up. Another practitioner, who was unable to schedule a meeting during a busy time was threatened with having the refusal passed up the line to a supervisor.
The piece goes to tell us that the visits will be performed in the coming weeks and months and may last up to 3 hours. Does anyone see a problem with this yet?
These chats are designed to be friendly reminders of all the pitfalls out there in tax preparer land; not a compliance visit (but they will remind you of the penalties that can be assessed for any malfeasance). Regardless of the pleasant intentions, the timing has irked CPAs to no end and we can’t say that we blame them. Hope no one is expecting an apology. And one more thing, we’d like to know how the Commish’s CPA feels about this whole thing. Just for fun; he should get a letter.
IRS ‘10,000 Letters’ Program Angers CPAs [CPA2Biz]
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IRS Accused of Being Sneaky Double-Crossing Tricksters
Who would have guessed that the IRS was capable of pulling the old switcheroo on confessed tax dodgers?
Apparently not some “former high-ranking tax officials” who are all bent out of shape because the IRS decided to prosecute their clients even though they came out of offshore tax haven land with their hands up.
A letter dated March 30 and signed by 32 lawyers, many of them former high-ranking tax officials now in private practice, said the IRS actions “smack of trickery.” They said that because the taxpayers had turned themselves in, they shouldn’t be prosecuted. The letter said heavy-handed treatment of some account holders could cause taxpayer confessions to “grind to a halt.”
…
The letter acknowledged the government’s long-held right to reject confessors if it already has their names or has opened an audit. But it argued that subjecting these taxpayers to rare public prosecutions would look like a double-cross. The writers also warned that if the government went ahead with prosecutions, it would radically change the “risk assessment” they offer their clients and lead to fewer voluntary disclosures.
So you acknowledge the right of the Feds to say ixnay on confessions of known tax scofflaws, plus one of Dougie’s deputies is quoted saying this: “The Service has been clear and consistent. We said that people already known to us were not good candidates,” and then you write a letter? The IRS has been attacked from the air, had suspicious packages dropped on their doorsteps and been blamed for suicides and you think a stern letter is going to sway them?
IRS Faulted for Prosecuting Confessed Evaders of Taxes [WSJ]