Lawmakers push IRS to provide tax relief, suspend more notices

A bipartisan group of 100 lawmakers in the House and Senate wrote a letter to IRS Commissioner Charles Rettig asking him to provide further relief to taxpayers who have been receiving warning notices from the IRS this tax season.

The letter comes after the IRS, under pressure from lawmakers and a coalition of accounting and tax groups including the American Institute of CPAs and the National Association of Tax Professionals, agreed last month to suspend the issuance of certain kinds of notices, including collection notices, balance due notices and unfiled tax return notices (see story).

Lawmakers and tax and accounting groups have also expressed concern over the backlog of millions of unprocessed tax returns from last year that the IRS is still dealing with, and the IRS announced plans last week to ramp up hiring of an additional 10,000 employees over the coming year to cope with the overload, on top of creating so-called “surge teams” this tax season made up of employees from other functions at the agency (see story).

Andrew Harrer/Bloomberg

However, the lawmakers want the IRS to provide more clarity about which notices it is suspending as well as expand its relief, along with considering delaying the filing of the Schedules K-2 and K-3 for reporting international income for partnerships, which the AICPA and other groups have been asking the IRS to do.

“We remain concerned that the IRS does not have a comprehensive plan to remedy the numerous problems affecting taxpayers, despite the fact that this filing season is already well underway,” the lawmakers wrote to Rettig in their letter. “For example, there is continued confusion about which notices may be unilaterally suspended by the IRS, beyond the notices the IRS has already suspended, among other issues.”

They asked for responses to a number of questions: “Which remaining unsuspended notices does the IRS have the authority to suspend? Please explain why the IRS has left these remaining notices unsuspended. Is the IRS in the process of working to suspend additional notices? If so, when will that work be completed? Which notices are statutorily required to be issued within a specific time? Would the IRS suspend these statutory notices if the IRS had the legal authority to do so? Explain why the IRS has not suspended notice CP2000, Notice of Underreported Income? Notwithstanding the publication of Notice 2021-39, widespread controversy surrounding Schedules K-2 and K-3 remains, including recent additional instructions, the inability to electronically file, and lingering uncertainty surrounding many requirements. As such, is the IRS contemplating relief, such as delaying implementation to 2023? In early February, the IRS advised Congress that it was considering a systemic process to identify pending penalty abatement requests, and likewise evaluating penalty relief options. Has the IRS determined if it can provide penalty relief for taxpayers as previously offered by the IRS for the 2020 and 2021 tax year? If not, why not?”

The letter was led by Sen. Bob Menendez, D-New Jersey, and Bill Cassidy, R-Louisiana, who are members of the Senate Finance Committee that oversees the IRS, alongside Rep. Jimmy Panetta, D-California, Abigail Spanberger, D-Virginia, Brian Higgins, D-New York, Gus Bilirakis, R-Florida, and Mike Kelly, R-Pennsylvania. The letter was supported by the coalition of tax and accounting groups, including the AICPA, NATP, National Association of Enrolled Agents, National Society of Accountants, National Conference of CPA Practitioners, National Association of Black Accountants, Latino Tax Pro, Padgett Business Services, Diverse Organization of Firms Advocacy Committee, National Society of Black Certified Public Accountants, Prosperity Now and National Society of Tax Professionals.

“Since the beginning of tax season, the AICPA, members of Congress, and various organizations representing taxpayers and practitioners have urged the IRS to take significant and meaningful steps to mitigate the anticipated challenges of this tax season,” said AICPA president and CEO Barry Melancon in a statement. “The AICPA is grateful to Senators Menendez and Cassidy, along with Representatives Panetta, Spanberger, Higgins, Bilirakis, and Kelly, for their persistent efforts to get taxpayers essential relief as we approach the March 15th filing deadline. The AICPA stands in support of the letter, signed by 100 members of Congress, to Commissioner Rettig urging him to respond to questions and concerns and offer clarification on notice suspensions. The tax season is well under way, and we hope the IRS will heed the widespread calls for meaningful relief and take the necessary steps to ease taxpayers’ burden and frustration.”