In addition to problems in communicating with the IRS to resolve taxpayer issues, such as erroneous automated notices generated due to data missing from unprocessed returns, many tax practitioners had to expand their expertise to assist clients with cybersecurity and cryptocurrency taxation issues.
The Inflation Reduction Act of 2022 (H.R. 5367) contained a provision for more resources for the IRS, including funds to hire more personnel over the next 10 years. (For a summary of the tax provisions, see https://bit.ly/3kpU1rA.) For a preview of how the IRS might be planning to spend its new resources, this month’s column reviews the IRS Strategic Plan, as well as IRS website resources related to many of the practice issues that arose during last year’s tax season, such as cryptocurrency, data security, and new electronic transmission tools. Additionally, although many AICPA-created resources are only available to members, some of the technical topic webpages provide links to IRS resources at the bottom of their pages, which are often better organized than the originating IRS website; a few of these are highlighted here.
IRS Strategic Plan
The IRS Strategic Plan for Fiscal Years 2022–026 (https://www.irs.gov/about-irs/irs-strategic-plan) provides, in the words of IRS Commissioner Chuck Rettig, “a roadmap to help illustrate the many ways our employees will provide service to the nation for years to come.” How does the IRS’s view of providing service compare with the repeated concerns expressed by CPAs? The complete 26-page plan document (Publication 3744) is available on the IRS website, but a handy one-page summary (https://bit.ly/3xMvy2H) highlights the goals and objectives.
The IRS’s four goals for 2022–026 are service, enforcement, people, and transformation. “Service” does not appear to include answering the phone, but it does address increasing digital services and safeguarding taxpayer data, particularly with the expansion of digital applications. “Enforcement” broadly mentions improving operational efficiency and using technology to identify fraud while minimizing false positives during return processing. “People” covers recruitment and training, as well as strengthening relationships with “trusted partners,” who include tax preparers. Finally, “transformation” incorporates both improving the taxpayer experience and modernizing technology infrastructure. Time will tell if access to additional federal funding will actually make a difference or if this is just wishful thinking.
Tax Professional Home Pages
Readers are no doubt familiar with the IRS Tax Professionals webpage (https://www.irs.gov/tax-professionals). Although the resources are fairly streamlined, it does provide access to e-services, tax pro accounts and options for requesting powers of attorney, and the preparer identification number (PTIN) system, and hence makes a good starting page. Under “IRS Featured Topics,” there are links to a very useful page on identity theft for professionals; a tax reform page with further links for individuals, businesses, and tax-exempt entities; and a “Taxpayer First Act” webpage that essentially addresses the service strategy emphasized in the IRS Strategic Plan (above).
The AICPA’s “IRS Practice & Procedure” webpage (https://bit.ly/3ExR5A7) provides only limited resources for non-members; however, the “Collection Guidance and Resources” subsidiary page (https://bit.ly/41jRJLg) and the “AICPA Tax Identity Theft Toolkit” page (https://bit.ly/3ILWSU3) present handy links to IRS resources, such as IRS collection and installment agreement forms, IRS Identity Theft Central, and stakeholder liaison contacts.
Virtual Currency and Digital Assets
The “IRS Digital Assets” web-page (https://www.irs.gov/businesses/small-businesses-self-employed/digital-assets) collects the IRS notices, publications, and Q&As related to virtual and crypto currencies. Most of the recent IRS advice has been in the form of Chief Counsel Memorandum on specific issues—for example, Chief Counsel Advice (CCA) 202302012 on the requirement of a qualified appraisal for a contribution of cryptocurrency.
The AICPA’s “Virtual Currency and Digital Assets Tax Guidance and Resources” webpage (https://bit.ly/3IQqcd4) provides alternative access to recent IRS materials, as well as two excellent 20-minute podcasts. “Cryptocurrency: Discover Three Ways to Add Value for Your Clients,” from the Personal Financial Planning section, addresses tax planning and preparation issues, items to consider when providing crypto investment advice, and options for obtaining cryptocurrencies (https://bit.ly/3QmvUoK). “Dissecting the Latest in the World of Crypto Assets and Taxes,” from the Tax Section Odyssey series, covers cryptocurrency basics, taxation and IRS guidance, IRS notices, and many other related topics (https://bit.ly/3tI8eBu).
“Identity Theft Central” (https://www.irs.gov/identity-theft-central) is still a good place to start on the IRS website. It offers links to subsidiary webpages with extensive materials, such as “Taxpayer Guide to Identity Theft and Identity Theft Information for Tax Professionals” (https://bit.ly/3ml644d), which provides resources for data security plans, including IRS publications, such as “Publication 4557: Safeguarding Taxpayer Data,” and “Publication 5293: Data Theft Resource Guide for Tax Professionals.”
The AICPA’s “Professional Responsibilities in Data Security for Tax Professionals” web-page (https://bit.ly/3XWumV9) presents a nice selection of resources of which some are freely available. Examples include links to IRS publications, AICPA IRC section 7216 guidance, and downloadable sample consent forms. AICPA Tax Section members can download the “Graham-Leach-Bliley Act (GLBA) Information Security Plan Template,” a customizable MS Word document that addresses designation of representatives, risk identification and assessment and current safeguards, design and implementation of safeguards program, protocols to select service providers, and procedures for evaluation of the Internet security plan (https://bit.ly/3EAJH6O).
New Electronic Transmission Tools
The Taxpayer First Act of 2019 reduced e-filing thresholds for partnerships, corporations, and other forms, which may help the IRS lower the backlog of unprocessed returns in the future. The Treasury Department recently released the final regulations (see IR-2023-31) that reflect the reduced thresholds. A new portal is available on the IRS website, Information Returns Intake System (IRIS), for Form 1099 information forms (https://bit.ly/3SrQOEu). The webpage offers links to “Publication 5717: IRIS Portal User Guide,” and a three-minute demonstration video. For more general information on information forms, the IRS provides a lengthy webpage “General Instructions for Certain Information Returns” (https://bit.ly/3Iz1SLE), and a “Guide to Information Returns” webpage with an extensive table that identifies the many specific information forms (https://bit.ly/3IMNX5R).
On a related note, the IRS has created a Document Upload Tool (See FS-2023-05) to allow taxpayers to submit documentation in response to IRS notices (https://apps.irs.gov/app/digital-mailroom/notices/). However, access must be initiated by the IRS with a code provided by the IRS, and as such this author could not access it for a demonstration.
Additional IRS Resources
IRS Tax Time Guide
IRS E-file for Tax Professionals
IRS E-file Help Desk for Tax Professionals
IRS State Tax Payments