With the government shutdown over (at least for now) and the Internal Revenue Service hard at work getting tax season launched, tax preparers had some very specific requests (as well as some strong words) for their representatives in Congress.
“Please fund the IRS adequately, establish federal oversight of paid tax preparers and get the federal government functioning so tax administration and tax compliance are not irreparably harmed,” asked Phyllis Jo Kubey, an enrolled agent in New York. “Uncertainty and unavailable IRS services severely hamper taxpayers and the tax pros who assist them.”
“Pay the IRS as soon as possible!” said Mary Kay Foss, a CPA in Walnut Creek, California. “The IRS has been underfunded for years. No business would cut the budget of the people who collect what’s owed. So few people and businesses are audited … that it encourages people to cheat. We need a well-trained, well-paid IRS staff so that those of us who pay our taxes aren’t being made fools of. ... And train them and get them up-to-date technology.”
‘Confused and scared’
Confusion now reigns on both sides of the desk during tax prep engagements, some preparers said.
“The taxpayer is confused and scared,” said Kerry Freeman, an EA at Freeman Income Tax Service in Anthem, Arizona. “Congress says, ‘We made it simpler’ and ‘It’s now a postcard’ – neither of which does the taxpayer believe or understand. The message from the tax industry is, ‘It is more complex and will be more costly.’ The real elephant in the room is Congress’ belief that the un-enrolled tax professionals who are not EAs and CPAs understanding and are ready for the complexities.”
“Dear Congress: ... The impact of the [TCJA] is continuing to haunt businesses and individuals alike. The express bias against knowledge workers (e.g. consultants, lawyers, accountants, physicians and so on) relative to the benefits thrust upon real estate-related activities leaves a rancid taste in taxpayers’ mouths,” said Daniel Morris, senior partner at Morris + D'Angelo in San Jose, California. “The IRS also has limited resources and aging technologies. Complexity has increased for nearly all taxpayers even though the concept of simplification has been used."
“Congress,” added Morris, “we serve our collective constituents best when we truly align sound economic policies, an understanding of human behavior, simplified assessment and collection processes and less regulatory/compliance burdens.”
“As a tax preparer, I am puzzled by the new tax laws and that we did not know how to explain things to our clients because there have not been clear instructions from the IRS until recently," said Andrew Piernock, of Piernock Accounting and Tax Services in Philadelphia. "How in the world can tax estimates and planning be done until 2019? … Clients receive notices but we cannot contact the IRS to get these issues resolved.”
“When there’s an important tax law being discussed and voted on, Congress should have the incentive to read what’s written and not just read some highlights,'' Piernock added. "There are some items of the 2017 TCJA that need congressional corrections. When is this going to happen?”
“I expect to make more money this year simply because tax ‘simplification' has created many more new schedules to complete and it’s scaring clients from trying to tackle the return on their own,” said EA Terri Ryman of Southwest Tax & Accounting in Elkhart, Kansas.
Specific recommendations
“Tax simplification appears to be anything but that,” added Bruce Primeau, a CPA and president at Summit Wealth Advocates in Prior Lake, Minnesota. “Lots of changes to tax rules for 2018 – but of course exceptions to the new rules still exist so they are every bit as complicated as the old ones. For example, in regard to the new 199A deduction … many professional service are not eligible for this deduction for some reason, while most other businesses are. Once again the idea is to create a system whereby the rules apply to and benefit some taxpayers but specifically exclude others. Why carve out specific businesses? Unfortunately the Tax Code is full of examples like this.”
“Pass the Tax Technical Clerical Corrections Act,” said Lawrence Pon, a CPA at Pon & Associates, in Redwood City, California. “When you pass a tax law at breakneck speed and make handwritten changes, errors are bound to occur. This bill is supposed to correct the applicable recovery period for qualified improvement property (think restaurant improvements), make a number of clarifications with respect to the QBI deduction and other technical corrections.”
The outlook
Kansas’ Ryman remains “very concerned about workflow given the new complications,” she said. “I’m afraid we’ll be extending a lot more business and personal income tax returns because the year has begun sluggishly. Many clients don’t realize that the IRS is open for business and are delaying bringing in their documents because they don’t believe that the return will be processed timely by the government.”
“Additionally, I’ve needed to discuss issues with the IRS, and although I utilize the tax practitioner hotline, wait times are longer,” she added. “Other numbers on IRS correspondence are not operational at all. Now that the shutdown has been lifted (for a couple of weeks), websites such as EIN applications are still not operational.”
