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June 2017

IRS Launches ITIN Renewal Outreach Program

The IRS has started an outreach program for taxpayers with individual tax identification numbers (ITINs) that have expired or are slated to expire at the end of 2017. The IRS is encouraging taxpayers with ITIN middle numbers 70, 71, 72 and 80 (e.g., 9NN-70-NNNN) to submit a renewal application this summer to avoid delays that could affect their tax filing and refunds in 2018. Households with multiple members who have ITINs may be eligible for renewal at the same time even if their ITINs expire at different times. This includes the taxpayer with the expiring ITIN, the taxpayer’s spouse and their dependents. Practitioners and taxpayers can access IRS.gov where ITIN instructions are available in multiple languages.

https://www.irs.gov/individuals/individual-taxpayer-identification-number-itin

 


Private Debt Collection Update

By Kathy Ploch, CPA-Houston

During a recent meeting with TSCPA’s Relations with IRS Committee and other professional organizations, IRS Director of Collection Planning and Performance Analysis Bill Banowsky reported on the status of the private debt collection efforts enacted by Congress in the Fixing America’s Surface Transportation Act of 2015 (FAST Act).

The IRS implemented a controlled launch in mid-April of roughly 100 cases per week to four private firms: CBE, ConServe, Performant and Pioneer. The number of transfer cases has gradually increased and will be up to around 2,000 per week by July. The assigned private collection agency (PCA) receives the taxpayer’s mailing address, a phone number if on file and a balance due, but no other confidential financial data. At this time, only individual accounts are affected; business account collections will begin in 2019.

The IRS will issue collection Notice CP40 to the taxpayer identifying the PCA and a unique authentication code. The PCA will send a separate letter to the taxpayer confirming the assignment and code. When the PCA calls, the taxpayer will state the code’s first five digits and the PCA, the last five digits. Scams will happen – if the taxpayer fears that the caller is an imposter or does not name the firm listed on the CP40, the taxpayer can contact the IRS and be directed to the firm working the account.

The collector will ask the taxpayer to pay in full or enter into an approved payment agreement. If the taxpayer cannot do either, the PCA must refer the account back to the IRS. The PCA has no authority to negotiate, take enforcement action, charge a user fee or accept a payment on the IRS’ behalf. In addition, the taxpayer can opt out of the collection program by written notification.

If a valid Power of Attorney (POA) is on file for the unpaid tax year(s), the IRS and PCA will contact the representative instead. If the taxpayer indicates that he or she has signed a POA, the account is to be placed on hold to allow for POA processing.

These private firms keep up to 25 percent of their receipts. They are governed by consumer protection provisions of the Fair Debt Collection Practices Act and should be courteous and respect taxpayer rights. All phone calls are recorded. PCAs undergo quality and customer satisfaction reviews. However, some concerns have already surfaced about Pioneer’s call script and collection tactics. To report PCA misconduct, call the TIGTA hotline at 800-366-4484 or visit www.tigta.gov. The Taxpayer Advocate Service also has agreed to accept private collection cases.

See the following for more details:

www.irs.gov/businesses/small-businesses-self-employed/private-debt-collection

www.irs.gov/pub/irs-pdf/p4518.pdf

https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text

https://www.accountingtoday.com/news/senators-concerned-about-irs-private-debt-collector-abuse

 


Letter Ruling Fees to be Paid Electronically After August 15

After Aug. 15, 2017, Pay.gov will be the required payment method for certain types of ruling fees. These rulings include private letter rulings, closing agreements and rulings using:

  • Form 1128 Application to Adopt, Change or Retain a Tax Year,
  • Form 2553 Election by a Small Business Corporation,
  • Form 3115 Application for Change of Accounting Method, or
  • Form 8716 Election to Have a Tax Year Other than a Required Tax Year.

Determination letters are not affected since they are addressed to a different division. Below is a link to the payment form listing information needed to process payment and a second link to the online payment form.

https://www.pay.gov/public/form/preview/pdf/106105509

https://www.pay.gov/public/form/entry/102/

 

 


TSCPA Recently Met with Taxpayer Advocate’s Office in D.C.

By Federal Tax Policy Committee

Last month, Jim Smith, CPA-Dallas, TSCPA Chairman Jim Oliver, CPA-San Antonio, and TSCPA Federal Tax Policy Committee Chair Christi Mondrik, JD, CPA-Austin, met with Rostylslav Shiller and Michael Baillif with the IRS Taxpayer Advocate Service (TAS) in Washington, D.C., to discuss issues raised in recent TSCPA Federal Tax Policy Committee letters to the IRS. Focus was primarily on IRS appeals and the “Future State” initiative.

The committee members expressed to Shiller and Baillif that the committee shares National Taxpayer Advocate Nina Olson’s concerns regarding IRS funding, the funding of the Taxpayer Advocate’s Office and the focus of that funding on carrying out the objective of customer service as set forth in the Taxpayer Bill of Rights. There are now 12 states without any permanent settlement or appeals officers. Other taxpayer service resources are depleted, as well, and the IRS’ computer systems still do not communicate cohesively to allow taxpayers to expeditiously resolve problems.

The committee members reiterated the importance of in-person conferences in IRS appeals, as these are often the first opportunities for taxpayers to communicate with an IRS representative. They expressed concerns about delays in case resolution precipitated by the implementation of Appeals Judicial Approach and Culture (AJAC) procedures and advocated for the appeals or settlement officer’s discretion to resolve cases directly where it would be efficient and appropriate to do so.

The committee members expressed concerns about recent changes to Internal Revenue Manual (IRM) 8.6.1.4, which limits taxpayers’ access to in-person conferences. Since the appeals campuses are the first point of contact, even if a taxpayer’s local office would be happy to meet with him or her, the transfer to the local office not only delays case resolution (especially where a face-to-face conference was requested as part of the original protest letter) but also results in unpredictable processing of case transfer requests.

The committee members expressed serious concerns about recently released procedures allowing revenue agents and IRS counsel in appeals conferences, which appears to violate the whole objective of the appeals conference and taxpayer rights by undermining independent review of a taxpayer’s case by the appeals or settlement officer.

The committee members also discussed concerns about IRS implementation of the Future State program and virtual service delivery (VSD), which offers taxpayers a videoconferencing alternative to in-person conferences. There are significant communication concerns for Texas taxpayers, particularly for our state’s citizens with English as a second language and limited English fluency. Moreover, the only VSD in Texas is located in El Paso, which is geographically distant from the rest of the state in a different time zone.

Additional concerns addressed involved the IRS’ contact of taxpayers directly, even when taxpayers are represented by counsel. It seems this is facilitated by the ability through some IRS pilot programs to engage in direct communications with the taxpayer, without copying the representative, if the representative has not yet registered for the system and is unaware of the contact to the taxpayer.

The TAS representatives complimented the committee’s efforts through its letters, shared the National Taxpayer Advocate’s 2016 Annual Report to Congress (released Jan. 10, 2017) and informed them that passport revocation issues have been added to the list of circumstances for which a taxpayer may immediately obtain TAS assistance.

Schiller and his colleagues will attend the IRS Tax Forum in Dallas, Texas, July 25-27, 2017.

https://taxpayeradvocate.irs.gov/reports/2016-annual-report-to-congress https://www.irstaxforum.com/index


Understanding Your Notice CP148

IRS Notice CP148 came about as part of the Consolidated Appropriations Act of 2014. Beginning in 2015, address changes made on the Business Master File (BMF) entity with open employment tax filing requirements generates two notices to the taxpayer confirming the change:

  • CP148A is mailed to the taxpayer's new address, and
  • CP148B is mailed to the taxpayer's previous address.

Any change to the taxpayer’s address will generate the notices including minor changes such as changing “suite” to “ste.” If the address change is correct, no follow-up action is necessary. If it is not correct, the taxpayer should return the notice to the IRS with a completed Form 8822-B, Change of Address or Responsible Party - Business. Make sure the taxpayer’s business address is consistent on all tax return filings with the IRS.

https://www.irs.gov/individuals/understanding-your-cp148a-notice

https://www.irs.gov/pub/notices/cp148b_english.pdf


IRS Suspends PTIN Program

On June 1, 2017, the U.S. District Court for the District of Columbia upheld the IRS’ authority to require the use of a preparer tax identification number (PTIN), but enjoined the IRS from charging a user fee for the issuance and renewal of PTINs. The court decided that after the Loving decision took away the IRS’ authority to set criteria for becoming a registered return preparer, there was no longer any rationale for charging a fee because anyone could get a PTIN and obtaining one did not provide a “service or thing of value” for which the IRS could charge a fee.

The IRS will likely still require the use of PTINs, but has temporarily suspended its registration and renewal program. In addition, the IRS may have to refund the fees that it improperly charged practitioners in past years. (Adam Steele, et al. v. United States of America, Case No. 1:14-cv-1523-RCL (D.D.C. 6/1/17))(Loving v. IRS, 742 F3d, 1013 (D.C. Cir. 2014))

http://www.journalofaccountancy.com/news/2017/jun/circuit-court-strikes-down-ptin-user-fees-201716814.html?utm_source=mnl:cpald&utm_medium=email&utm_campaign=06Jun2017

http://law.justia.com/cases/federal/district-courts/district-of-columbia/dcdce/1:2014cv01523/167956/78/


TSCPA Committee Issues Letter to IRS on Centralized Partnership Audit Regime

The Texas Society of CPAs’ Federal Tax Policy Committee issued a letter to IRS Commissioner John Koskinen regarding preliminary proposed rules for the centralized partnership audit regime (REG 136118-15). As the IRS moves toward reintroducing proposed rules, the committee encourages the IRS to make necessary modifications to reduce the administrative burdens on both the IRS and taxpayers and to balance consistency with flexibility.

https://www.tscpa.org/docs/default-source/comment-letters/federal-tax-policy/2017/irs-partnership-audit-regime-letter.pdf?sfvrsn=2