IRSAC Report Has Hits and Errors

The Internal Revenue Service Advisory Council (IRSAC) issued its annual report today. I agree with some of the recommendations but strongly disagree with others.

IRSAC laments IRS funding. While I agree it would be nice to have the IRS fully funded, the problem was caused by the IRS (and especially Chairman Koskinen) and the IRS scandal. Until the IRS comes clean, Republicans in Congress rightly will not allow full funding. The IRS scandal is not noted in the report, but that’s the cause of the problem. Is IRSAC right? Yes, but their complaints will fall on deaf ears.

IRSAC commits an error when they advocate the IRS be granted statutory authority to regulate tax professionals (return preparers). IRSAC is absolutely correct that congressional action is needed for the IRS to have the authority to regulate tax professionals. IRSAC is, however, silent on the current tools available against unscrupulous preparers. The law of supply and demand applies to tax preparation (just like anything else); if tax preparation is regulated, the supply will decrease and prices will increase. It won’t hurt me (I’m already a licensed professional) but it will hurt numerous “mom and pop” preparers and their clients. It will disproportionately help the large tax chains.

IRSAC hits it out of the park on some of their recommendations. I agree with their comments on IRS online applications (which are generally excellent), authentication of 1040 forms, and improving penalty administration.

Even where I disagree with IRSAC I want to commend them for the report. It’s a thorough analysis of a host of issues (some of which are out of my purview), and their recommendations–even those I disagree with–should be analyzed.


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