TXCPA Committee Calls for a Balanced IRS Budget in the BBB Act

TXCPA’s Federal Tax Policy Committee generally supports the increased IRS funding in the Build Back Better Act. However, the BBB proposed budget increase is allocated disproportionately toward enforcement activities as a revenue raiser. To restore taxpayer confidence, the committee urges a more balanced funding approach between taxpayer services, modernized technological infrastructure, staff training and compliance. The TXCPA FTP released a letter this week to the U.S. Senate Appropriations Chairman Patrick Leahy and Vice-Chairman Richard Shelby to support this more rational allocation of budget resources.

https://www.tx.cpa/docs/default-source/comment-letters/federal-tax-policy/2022_2023/2022/balancedirsfundsbbbact030222.pdf?sfvrsn=e79ad2b1_2

Comments

[Patty Wyatt, TXCPA]

Thank you for your inquiry, Donna. FTP committee member David Donnelly sent a private email to you. The committee also provided this information:

As to your specific question of whether the IRS will forgive late filing penalties:
1. If the tax returns were filed prior to 6/15/21, then no penalty should be assessed as the tax returns were timely filed even though the IRS has erroneously sent many taxpayers late filing notices (see TX-2020-02 and IR-2021-43).
2. The problem filing extensions electronically post 3/15/21 or 4/15/21 was not with your software company, but rather the IRS stopped accepting electronic extensions after those dates and instructed taxpayers and tax practitioners to file paper extensions between those dates and 6/15/21.
3. If tax returns were filed after 6/15/21 without being properly extended, penalties will be properly assessed by the IRS. You would be allowed to request the first-time penalty relief if the client has not had late filing penalties assessed in any of the last three years. Otherwise, you will have to rely on the IRS granting you reasonable cause relief, which we do not yet have enough data in to know if taxpayers are being successful using reasonable cause, even though the IRS is being pressured by tax practitioner groups and Congress to provide reasonable cause relief due to the pandemic.

[Donna Chamberlain]

Will the IRS forgive late filing penalties for Texas taxpayers because software Proconnect Tax Online would not except electronically filed extensions past the original due dates of March 15 and April 15?