ALERT – Page 4 – Larson Accounting Group

11 de July de 2023

The Internal Revenue Service joins its Security Summit partners today to announce the start of a special summer “Protect Your Clients; Protect Yourself” campaign aimed at ensuring tax professionals stay alert against new and ongoing threats of tax-related identity theft.

“The Security Summit plays a key role in protecting federal and state tax filings from identity thieves. Their work continues to strengthen our systems against fraudulent tax returns,” said IRS Commissioner Danny Werfel. “Tax professionals also form a critical part of our defenses. The sensitive financial and tax information they hold is a tempting target. It’s critical that those handling sensitive tax information, especially smaller practices, stay current and keep their systems safe.”

The Summit coalition of the IRS, state tax agencies and the nation’s tax community will start the annual summer series next week to raise awareness among tax professionals about the importance of maintaining strong security. The series will run for five consecutive weeks each Tuesday, coinciding with the start of the IRS Nationwide Tax Forums today in New Orleans. The news release series and the summer Tax Forums will provide important information to help protect sensitive taxpayer data that tax professionals hold while also protecting their business from identity thieves.

This marks the eighth year that the Security Summit partners have worked to raise awareness about these issues through the “Protect Your Clients; Protect Yourself” campaign.

Building stronger connections with tax professionals and increasing collaboration with groups like the Security Summit are part of the transformation effort outlined in the new IRS Strategic Operating Plan.

The 10-year plan, unveiled in April, highlights areas in which the IRS will be working to make improvements to help taxpayers, tax professionals and the nation.

By taking some basic security steps, tax pros can help protect themselves against the relentless efforts of identity thieves. This summer’s effort focuses on a reminder for tax pros to focus on fundamentals and to watch out for emerging vulnerabilities.

Tax professionals are prime targets of criminal syndicates that are both tech- and tax-savvy. These scammers either trick or hack their way into tax professionals’ computer systems to access client data. Even when tax pros think they have client data stored in a secure platform, such as the cloud, lack of strong authentication can make this information vulnerable.

Identity thieves use stolen data to file fraudulent tax returns that make it more difficult for the IRS and the states to detect because the fraudulent returns use real financial information. Other data thieves sell the basic tax preparer or taxpayer information on the web so other fraudsters can try filing fraudulent tax returns.

The Security Summit formed in 2015 to join the fight against identity theft. The Summit partners have made great inroads against tax-related identity theft, dramatically reducing confirmed identity theft returns and saving billions in tax dollars during the course of the collaborative effort.

The summer Security Summit tax pro campaign will cover these key topics that will highlight a series of simple actions that tax professionals can take to better protect their clients and themselves from sensitive data theft. Taking these steps now will help ensure the progress in tax-related identity theft continues.

Create a security plan. The Written Information Security PlanPDF, or WISP, is a 28-page, easy-to-understand document developed by and for tax and industry professionals to keep customer and business information safe and secure. Security Summit partners, including tax professionals, software and industry partners, representatives from state tax groups and the IRS developed the WISP. The Summit partnership will highlight these plans at each of the five IRS Nationwide Tax Forumsthis year.
Sign up clients for Identity Protection PINs. The IRS now offers IP PINs to all taxpayers who can verify their identities online, on the phone with an IRS employee after filing a Form 15227 or in person. To obtain an IP PIN, the best option is the IRS online tool Get an IP PIN Before attempting this thorough process, see How to Register for Certain Online Self-Help Tools. If taxpayers are unable to validate their identity online and if their income is below $73,000 for individuals or below $146,000 for married couples, they may file Form 15227, Application for an Identity Protection Personal Identification NumberPDF.
Phishing, Spear phishing and Whaling. These aren’t summer activities; these are real cyber schemes that put sensitive information at risk. Tax pros are a common, everyday target of phishing scams designed to trick the recipient into disclosing personal information such as passwords, bank account numbers, credit card numbers or Social Security numbers. Tax professionals, and taxpayers, should be aware of different phishing terms and what the scams might look like.
Know the tell-tale signs of identity theft. Many tax professionals who report data theft to the IRS also say they were unaware of signs that a theft had already occurred. There are many signs for which tax pros should watch. These include: multiple clients suddenly receiving suspicious IRS letters requesting confirmation that they filed a tax return; tax professionals seeing e-file acknowledgements for far more tax returns than they filed; and tax pros’ computer cursors moving seemingly on their own.
Help clients protect themselves whether working from home or traveling. With the continuation of work-from-home policies for many organizations, taxpayers may find themselves conducting their affairs – whether personal, business or financial – in a different way. Tax pros can help their clients protect themselves by sharing key bits of information on computer security. These cyber-smart tactics protect not only the tax professional, but also their clients.

Source: IRS-2023-124, July 11, 2023

by Larson Accounting

30 de March de 2023

WASHINGTON —The Internal Revenue Service today warned tax professionals and businesses that they remain a top target for identity thieves and face threats from common scams on this year’s Dirty Dozen list.

As part of the annual Dirty Dozen tax scams effort, the IRS and the Security Summit partners urged tax professionals and businesses to be on the lookout for a variety of suspicious email requests. Through these spearphishing emails, scammers try to steal client data, tax software preparation credentials and tax preparer identities with the goal of getting fraudulent tax refunds. These requests can range from an email that looks like it’s from a potential new client to a request targeting payroll and human resource departments asking for sensitive Form W-2 information.

“It’s vitally important for tax professionals and businesses to maintain a strong defense against cyberattacks like spearphishing,” said IRS Commissioner Danny Werfel. “The information these businesses have on their systems is extremely valuable to an identity thief looking to steal identities and file fraudulent tax returns. There are simple steps that tax pros and businesses can take to avoid being fooled by these common schemes, including extra caution when opening emails, clicking on links or sharing sensitive client data. Extra care can go a long way to protect tax professionals and businesses as well as their clients.”

Working together as the Security Summit, the IRS, state tax agencies and the nation’s tax industry have taken numerous steps since 2015 to strengthen internal systems and controls to protects against tax-related identity theft. As part of this effort, the IRS and Summit partners continue to warn people about common scams and schemes during tax season and beyond that can threaten a taxpayer’s personal and financial information. The Security Summit initiative is committed to protecting taxpayers, businesses and the tax system from scammers and identity thieves, and the Dirty Dozen is part of the larger effort.

The IRS’ annual Dirty Dozen campaign is a list of 12 scams and schemes that put taxpayers and the tax professional community at risk of losing money, personal information, data and more. Some items on the Dirty Dozen are new and some make a return visit. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, it is intended to alert taxpayers and the tax professional community about various scams and schemes.

Side-step spearphishing: Cyber security tips for tax pros and businesses

Phishing is a term given to emails or text messages designed to get users to provide personal information, either directly or by clicking on a link or attachment. Spearphishing is a tailored phishing attempt to a specific organization or business.

The IRS is warning tax professionals about spearphishing because there is greater potential for harm if the tax preparer has a data breach. A successful spearphishing attack can ultimately steal client data and the tax preparer’s identity, allowing the thief to file fraudulent returns.

A taxpayer becoming a victim of tax-related identity theft is certainly an issue with spearphishing, but criminals seeking tax preparer credentials or access to their client’s tax-related information increases the potential number of victims.

Spearphishing begins with a suspicious email – one that may appear as a tax preparation application or another e-service or platform. Some scammers will even use the IRS logo and claim something like “Action Required: Your account has now been put on hold.” Often these emails stress urgency and will ask tax pros or businesses to click on links to input or verify information.

How to side-step spearphishing:

Never click suspicious links.
Double check the requests with the original sender.
Be vigilant year-round, not just during filing season.

Client impersonation: Spearphishing aimed at tax pros

The IRS and its Security Summit partners continue to see spearphishing attempts that impersonate a new potential client, known as the “New Client” scam. If the tax preparer responds, the scammer sends a malicious attachment or URL that ultimately enables them to gain access to sensitive client information on the tax preparer’s computer systems.

Bogus requests for W-2s: Spearphishing aimed at businesses

The IRS wants to warn businesses about another specific spearphishing scam that targets employees in payroll or accounting departments. These employees might get an email that looks like it comes from an official source requesting W-2s for all employees. The payroll department might accidentally reply with these important documents, which would provide scammers with W-2 data on employees that can be used to commit fraud.

The IRS recommends using a two-person review process when receiving these types of requests for W-2s. The IRS also recommends any requests for payroll be submitted through an official process, like the employer’s Human Resources portal.

Make a difference: Report fraud, scams and schemes

Individuals should never respond to tax-related phishing or spearfishing or click on the URL link. Instead, the scams should be reported by sending the email or a copy of the text/SMS as an attachment to phishing@irs.gov. The report should include the caller ID (email or phone number), date, time and time zone, and the number that received the message.

Taxpayers can also report scams to the Treasury Inspector General for Tax Administration or the Internet Crime Complaint Center. The Report Phishing and Online Scams page at IRS.gov provides complete details. The Federal Communications Commission’s Smartphone Security Checker is a useful tool against mobile security threats.

As part of the Dirty Dozen awareness effort, the IRS encourages people to report individuals who promote improper and abusive tax schemes as well as tax return preparers who deliberately prepare improper returns.

To report an abusive tax scheme or a tax return preparer, people should mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or PreparersPDF and any supporting materials to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:

Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, CA 92677-3405
Fax: 877-477-9135

Alternatively, taxpayers and tax practitioners may send the information to the IRS Whistleblower Office for possible monetary reward.

Source: IRS-2023-62, March 29, 2023

by Larson Accounting

27 de March de 2023

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WASHINGTON — The Internal Revenue Service today continued the Dirty Dozen series by cautioning taxpayers to avoid unscrupulous tax return preparers and provided important tips to find the right tax professional.

People should be careful of shady tax professionals and watch for common warning signs, including charging a fee based on the size of the refund. Some “ghost” tax preparers refuse to sign the tax return or ask people to sign a blank return. These are all common warning signs, and people should always rely on a trusted tax professional, and the IRS offers a variety of resources to help.

“Most tax professionals offer excellent advice and can really help people navigate complex tax issues. But we continue to see instances where taxpayers are “ghosted” by unscrupulous tax preparers with bad advice who quickly disappear,” said IRS Commissioner Danny Werfel. “We encourage taxpayers to check out the tools and resources available to them to ensure they find the right tax professional for their needs.”

Unscrupulous tax return preparers mark day six of the IRS’ annual Dirty Dozen campaign – a list of 12 scams and schemes that put taxpayers and the tax professional community at risk of losing money, personal information, data and more. Some items on the Dirty Dozen are new, while others are re-emerging. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, it is intended to alert taxpayers and the tax professional community about various scams and schemes.

Working together as the Security Summit, the IRS, state tax agencies and the nation’s tax industry, including tax professionals, have taken numerous steps since 2015 to warn people about common scams and schemes during tax season and beyond that can increase the risk of identity theft. The Security Summit initiative is committed to protecting taxpayers, businesses and the tax system from scammers and identity thieves.

Choose carefully: Check credentials of tax return preparers

Taxpayers should choose a tax preparer as carefully as they choose a doctor or lawyer. After all, the tax preparer is entrusted with sensitive personal and financial information. While there are different types of tax preparers with varying levels of credentials and qualifications, there are constants when it comes to finding a preparer:

A taxpayer’s individual needs will determine which kind of preparer is best for them.
Taxpayers are ultimately responsible for all the information on their income tax return, regardless of who prepares the return.
Tax professionals are required to have an IRS Preparer Tax Identification Number (PTIN) to prepare federal tax returns.

The IRS offers resources for taxpayers to educate themselves on types of preparers, representation rights, as well as a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This directory can help taxpayers find a return preparer with specific qualifications to fit their needs. The directory is searchable and sortable.

Don’t get ghosted: Avoid shady or self-serving tax professionals

Most tax return preparers provide outstanding and professional service. Unfortunately, there are also some unethical tax preparers that should be avoided at all costs.

A major red flag or bad sign is when the tax preparer is unwilling to sign the dotted line. Avoid these “ghost” preparers, who will prepare a tax return but refuse to sign or include their IRS Preparer Tax Identification Number (PTIN) as required by law.

Not signing the return could mean the preparer may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund. This leaves the taxpayer vulnerable and on the hook for any misinformation on the return. Taxpayers should never sign a blank or incomplete return.

Shady tax preparers may:

Ask for a cash only payment without providing a receipt.
Invent false income to try to get their clients more tax credits.
Claim fake deductions to boost the size of the refund.
Direct refunds into their bank account, not the taxpayer’s account.

Taxpayers can report preparer misconduct to the IRS using Form 14157, Complaint: Tax Return Preparer.PDF If a taxpayer suspects a tax return preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct AffidavitPDF.

Make a difference: Report fraud, scams and schemes

Mail:

Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, CA 92677-3405
Fax: 877-477-9135

Alternatively, taxpayers and tax practitioners may send the information to the IRS Whistleblower Office for possible monetary reward.

For more information, see Abusive Tax Schemes and Abusive Tax Return Preparers.

Source: IRS-2023-59, March 27, 2023

by Larson Accounting

5 de December de 2022

To wrap up National Tax Security Awareness Week, the Internal Revenue Service and the Security Summitpartners today urged businesses to remain vigilant against cyberattacks aimed at stealing their customer’s personal information and other business data.

The IRS continues to see instances where small businesses and others face a variety of identity-theft related schemes that try to obtain information that can be used to file fake business tax returns. For example, phishing schemes continue to target businesses as well as tax professionals and individual taxpayers.

“Just like individuals and tax professionals, businesses of all types need to be on the lookout for attempts to steal information and data,” said IRS Acting Commissioner Doug O’Donnell. “Businesses are especially attractive to cyberthieves because there is a potential to steal a lot of data. They may use the information to file a business tax return or use customer data for identity theft.”

The IRS, state tax agencies and the nation’s tax software and tax professional industries operate cooperatively as the Security Summit to highlight data security and fight identity theft. Today marks the final day of the seventh annual week dedicated to information security and helpful tips for individuals, businesses and tax professionals.

Cyber criminals target businesses of all sizes; knowing some cybersecurity basics and putting them in practice will help business owners protect their business and reduce the risk of a cyber-attack. Criminals can target a business’s credit card or payment information, business identity information or employee identity information.

Businesses are encouraged to follow best practices from the Federal Trade Commission, including:

Use multi-factor authentication.
Set security software to update automatically.
Back up important files.
Require strong passwords for all devices.
Encrypt devices.

More information is available at FTC’s Cybersecurity for Small Businesses.

Businesses should especially be alert to phishing email scams that attempt to trick employees into opening embedded links or attachments. IRS related scams may be sent to phishing@irs.gov so the IRS can try to track, stop or disrupt scams.

To improve security, the IRS now masks sensitive information from business tax transcripts, which summarizes tax return information, to help prevent thieves from obtaining identifiable information that would allow them to file fake business tax returns. Only financial entries are fully visible. Other information has varying masking rules. For example, only the first four letters of each first and last name will display for individuals and businesses. Also, only the last four digits of the Employer Identification Number will be visible.

The IRS also has the Form 14039-B, Business Identity Theft AffidavitPDF, that will allow companies to proactively report possible identity theft to the IRS when, for example, an e-filed tax return is rejected.

Businesses should file the Form 14039-B if it receives a:

Rejection notice for an electronically filed return because a return is already on file for that same period.
Notice about a tax return that the entity didn’t file.
Notice about Forms W-2 filed with the Social Security Administration that the entity didn’t file.
Notice of a balance due that is not owed.

This form will enable the IRS to respond to the business and work to resolve issues created by a fraudulent tax return. Businesses should not use the form if they experience a data breach but see no tax-related impact. For more information, see Identity Theft Central’s business section.

In addition to phishing and other scams, all employers should remain alert to Form W-2 theft schemes. For example, a thief may pose as a company executive who emails payroll employees and asks for a list of employees and their W-2s. Businesses often don’t know they’ve been scammed until an employee reports that a fraudulent tax return has been filed.

There’s a special reporting procedure for employers who experience the W-2 scam. It’s available in the Identity Theft Central’s business section.

Finally, Security Summit partners urge businesses to keep their EIN application information current. Changes of address or responsible party information may be reported using Form 8822-B. Changes in the responsible party must be reported to the IRS within 60 days. Current information can help the IRS find a point of contact to resolve identity theft and other issues.

For more details and to learn more about this year’s National Tax Security Awareness Week’s efforts, visit IRS.gov/securitysummit.

Source: IRS-2022-211, December 2, 2022

by Larson Accounting

29 de November de 2022

WASHINGTON — On Cyber Monday, the Internal Revenue Service and the Security Summit partners kicked-off the 7th National Tax Security Awareness Week with information for taxpayers and tax professionals on how to avoid scams and protect sensitive personal information.

With the holiday season now in full swing, the period presents a prime opportunity for identity thieves to try stealing personal financial information, which also could be used to potentially file fraudulent tax returns. People can face risks if they’re shopping online and using publicly accessible Wi-Fi. And the Summit reminds people that fictitious text scams with “smishing” schemes continue during this period.

“With holiday shopping starting and the 2023 tax season quickly approaching, many people will be using laptops and personal devices to share sensitive financial information,” said IRS Acting Commissioner Doug O’Donnell. “In the months ahead, these same devices will be used to complete millions of tax returns by both taxpayers and tax professionals, making the holiday season the perfect time to take steps to protect your valuable information and watch out for scams.”

Formed in 2015, the Security Summit partnership between the IRS, state tax administrators and the tax software and tax professional community have worked together to improve defenses and protect people from tax-related identity theft. As part of that effort, the Summit partners worked to raise taxpayer and tax professional awareness about security issues – not only protecting people from the risk of identity theft but helping protect the nation’s tax system from refund-related fraud.

The Summit partners urged people to take extra care while shopping online or viewing emails and texts, especially during the holiday season when criminals are very active. The Security Summit reminds everyone to stay safe while holiday shopping with the following considerations:

Shop at sites where the web address begins with “https” – the “s” is for secure communications and look for the “padlock” icon in the browser window.
Don’t shop on unsecured public Wi-Fi in places like a mall.
Keep security software for computers, tablets and mobile phones updated.
Protect the devices of family members, including young children, older adults as well as less technologically savvy users.
Make sure anti-virus software for computers has a feature to stop malware, and that there is a firewall enabled that can prevent intrusions.
Use strong and unique passwords for online accounts.
Use multi-factor authentication whenever possible. It helps prevent thieves from easily hacking accounts.

The IRS also reminds people about advice from the Federal Trade Commission to never buy anything from online sellers that accept payment only by gift cards, money transfers through companies like Western Union or MoneyGram or cryptocurrency. Payments you make that way are nearly impossible to trace and reverse. Scammers often tell people to use those payment methods so they can get money quickly.

Additionally, the IRS warned taxpayers of a recent increase in IRS-themed texting scams aimed at stealing personal and financial information. During 2022, the IRS identified and reported thousands of fraudulent domains tied to multiple MMS/SMS/text scams (known as smishing) targeting taxpayers.

Smishing campaigns target mobile phone users, and the scam messages often look like they’re coming from the IRS, offering lures like fake COVID relief, tax credits or help setting up an IRS online account. Recipients of these IRS-related scams can report them to phishing@irs.gov.

Stolen data can be used to file fraudulent tax returns that make it more difficult for the IRS and the states to detect because the fraudulent returns use real financial information. Other data thieves sell the basic tax preparer or taxpayer information on the web so other fraudsters can try filing fraudulent tax returns.

Given the rise of texting scams, taxpayers can check out security recommendations for their specific mobile phone by reviewing the Federal Communications Commission’s Smartphone Security Checker. Since phones are used for shopping and even for doing taxes, remember to make sure phones and tablets are just as secure as computers.

Source: IRS-2022-204, November 28, 2022

by Larson Accounting

15 de August de 2022

Democrats spent last week swearing that only high earners would be squeezed under their plan to beef up the Internal Revenue Service. It only took a few days for the Congressional Budget Office to put that narrative to rest. A quick analysis from the budget scorer confirms that the audit expansion will ensnare the middle class.

The CBO made the point in an Aug. 12 letters two Sen. Mike Crapo, who had sought to bind Democrats to their promise to limit audits to high earners. If the IRS expansion plan “is not about folks who make less than $400,000,” as White House press secretary Karine Jean-Pierre claimed, why not make that clear in the bill? Mr. Crapo proposed an amendment to ensure new audits would exclude taxpayers earning less than $400,000, but Democrats voted it down 51 to 50.

Mr. Crapo then asked the CBO to calculate the effect his amendment would have had. The agency found that increased scrutiny on filers earning less than $400,000 would account for $20 billion over 10 years, out of a total of about $204 billion that Democrats hope to collect through a bigger, worse IRS. In other words, the IRS expansion as it’s currently designed could collect billions in revenue from new middle-class audits.

The problem is that for every tax cheat the IRS identifies, several more compliant tax filers will be subjected to unnecessary scrutiny. Many of the hundreds of thousands of people audited each year are chosen at random, and most taxpayers cannot afford a lawyer to go to Tax Court to contest IRS claims of tax liability. They write the check to end the relentless IRS pursuit, whether or not they think it’s fair.

Cracks had already emerged in the White House narrative before CBO weighed in. Treasury Secretary Janet Yellen, who oversees the IRS, wrote to the agency’s commissioner last week to clarify the funding plan.

The additional $80 billion, she wrote, “shall not be used to increase the share of small business or households below the $400,000 threshold that are audited.” [Emphasis added.] Contrary to the White House, Ms. Yellen promised only that new audits wouldn’t be directed disproportionately at the middle class. She didn’t dispute that thousands more middle and low earners will face scrutiny.

On Friday House Democrats passed the tax-and-spending bill that includes the supersize IRS on a party-line vote, and President Biden will sign it this week. Good luck to readers as the taxman comes.

Source: WSJ

by Larson Accounting

14 de June de 2022

The Internal Revenue Service announced the selection of Guy Ficco as the next Deputy Chief for IRS Criminal Investigation (IRS-CI). He will oversee 20 field offices and 11 foreign posts, including approximately 2,000 special agents investigating tax fraud and other financial crimes.

“The Deputy Chief position demands someone with vast experience in tax law and financial crimes, but also a passionate leader who can further the development of CI’s workforce”, said Jim Lee, Chief of IRS Criminal Investigation. “After nearly three decades serving our agency in various roles, Guy’s experience will prove invaluable as we continue uncovering financial crimes around the world.”

Ficco currently serves as IRS-CI’s Executive Director of Global Operations where he oversees CI’s policies related to investigations, as well as the agency’s international footprint. He provides executive leadership over CI’s Financial Crimes, Asset Recovery and Investigative Services, Special Investigative Techniques, and Narcotics and National Security sections, as well as CI’s International Field Operations.

Ficco will replace Jim Robnett, who will be retiring July 15 after 36 years of service at the IRS, 28 of which were with IRS-CI.

In previous IRS-CI positions, Ficco served as Special Agent in Charge, providing oversight and direction in matters relating to criminal investigation activities and programs for the Philadelphia Field Office. Additionally, during his tenure he held various leadership roles including Supervisory Special Agent in the Washington Field Office, Senior Analyst in both Financial Crimes and International Operations sections, Assistant Special Agent in Charge for the Washington Field Office, Director of Special Investigative Techniques, Washington DC, and long-term actor for Deputy Director, Strategy.

Ficco served as a Congressional Fellow through the Government Affairs Institute at Georgetown University, assigned to the Permanent Subcommittee on Investigations in the Senate Homeland Security Committee. He holds a bachelor’s degree in business administration with a concentration in Accounting from Dominican College in New York. He is a Certified Fraud Examiner and joined IRS Criminal Investigation in 1995.

IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, boasting a nearly 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 11 attaché posts abroad.

Source: IRS

by Larson Accounting

27 de April de 2022

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The IRS is returning employees who used to process tax returns and other paperwork back to their old jobs for the next eight months to help the agency cut through its massive backlog, Commissioner Chuck Rettig said in an internal email Wednesday night.

Current resources simply aren’t enough to overcome the challenge, he said, so he’s pulling people out of their new posts to leverage their prior experience.

“This is an all-hands-on-deck situation to help people as quickly as possible and reduce the stress on employees who have been and continue to face unprecedented levels of inventory to be worked,” Rettig wrote in his email to employees.

The plan involves reassigning agency employees who previously worked in the IRS accounts management group but have moved into other jobs at the IRS in the past two fiscal years. An IRS spokesperson said the moves would involve 1,200 workers, though more could be reassigned going forward.

Rettig’s email said the recall includes former customer service representatives, tax examiners, clerks or others who had support experience at IRS offices within the last two fiscal years. Other positions such as managers and analysts who wouldn’t directly deal with case closures were excluded.

The IRS had previously said some employees could be reassigned.

Pandemic starts pileup: The pandemic that began nearly two years ago forced the IRS to temporarily close many facilities nationwide and shift most employees into telework, which meant voluminous amounts of mail the agency receives from taxpayers started piling up.

While workers put a dent into it during the first year of the problem, the mail backlog snowballed last year as the IRS also managed large parts of pandemic relief legislation, including economic impact payments, Child Tax Credit payments for individuals and families, and tax breaks for businesses.

The paper processing problems have delayed tax refunds and also triggered automatic notices to taxpayers that they owe money and may be assessed additional taxes, even though in many cases they’d already replied to previous notices but those replies were sitting in mail piles.

The IRS entered the start of tax filing season this year, which began Jan. 24, with more than 8 million original and amended individual returns unprocessed, another roughly 1.5 million unprocessed original and amended business returns and close to 5 million other letters and documents from taxpayers in response to IRS notices.

Inventory surge team: Rettig said former accounts management employees “are in the best position to provide the much needed skills and support to serve the taxpayers represented in these inventories.” They’re being enlisted as part of what Rettig called “a Servicewide initiative” to quickly establish an inventory surge team.

IRS management has briefed the union that represents most IRS employees, the National Treasury Employees Union, and Rettig said negotiations would begin soon. No workers involved in the reshuffling will receive less pay than they do now or be moved from their current work locations, the IRS spokesperson said.

The union said in a statement that the IRS “has the right to take actions like this in order to accomplish the agency’s mission, and bargaining with the union will not stand in the way. In fact, during bargaining, local NTEU leaders intend to provide several suggestions to the agency for making the surge initiative as effective as possible.”

Chad Hooper, executive director of the Professional Managers Association, which represents IRS managers ineligible for union membership, said the group was “generally supportive of this plan.” But, in a statement, he raised numerous questions about it, including how it would affect customer service and other backlogs at the agency.

Hooper said “there are significant case inventories across the Service, for example in Collections, Examination, the Independent Office of Appeals, and the Taxpayer Advocate Service.”

The IRS expects to return reassigned employees to their current positions at the end of September, when the 2022 federal fiscal year ends.

Source: Politico

by Larson Accounting

25 de April de 2022

The Internal Revenue Service, faced with a backlog of millions of tax returns from last year, is reassigning workers to deal with the stacks of unprocessed paper. But the IRS faces an uphill task, and it seems Congress is unlikely to provide much help in the near future.

National Taxpayer Advocate Erin Collins recently told members of the Senate Finance Committee that the agency needs to get to a “stable and healthy condition so it can perform its core mission.” Collins told panel members on Thursday that as of early February, the tax collection agency had some 23.5 million tax returns and other documents, including correspondence that require manual processing, in its inventory.

She said the IRS reports that “all paper and electronic individual refund returns received prior to April 2021 have been processed if the return had no errors and did not require further review.” But she added, “by implication, that means returns filed as far back as April of last year are still awaiting processing.”

The IRS has taken steps to deal with the backlog and prepare for the current tax filing season, which began late last month and ends on April 18. Steps include assigning some 1,200 employees to help process amended returns and correspondence. The agency is also now establishing a “second surge team to put additional resources on the processing challenges,” she said.

Collins said the IRS has also announced “a welcome suspension” of many automated notices it sends out while it gets caught up on the backlog. But she said paper returns are the IRS’ kryptonite: “The IRS still transcribes paper line by line, number by number.”

The IRS also said it was reversing plans to close a tax processing center in Austin, Texas, in 2024. It shuttered a similar facility in Fresno, Calif., last year.

“We applaud the IRS for finally recognizing that those employees in Austin are essential to the agency’s ability to dig out from the backlog of returns and correspondence, and that there is an ongoing need for the IRS to retain this capacity,” Tony Reardon, president of the National Treasury Employees Union, which represents IRS workers, said in a statement.

The IRS has also been contracting out certain clerical work such as opening envelopes and is requiring mandatory overtime for some employees.

More work with fewer staffers

Adding to the challenge of dealing with individual and business tax returns, the IRS was given the responsibility of sending out three rounds of COVID-19 relief payments in the past two years, as well as distributing the advance earned income tax credits to eligible families.

The extra work comes at a time when the IRS’ staff is down 22% from 2010 levels, according to an analysis by the left-leaning Center on Budget and Policy Priorities, with funding down 20%.

Senate Finance Committee Chairman Ron Wyden, D-Ore., places the blame for that on Republicans, who cut the IRS’ budget while they controlled Congress. “Republicans could have changed course and corrected these issues in their big 2017 tax law,” Wyden said. “They did not. In fact, the budget cuts continued while the tax code got more complicated.”

The top Republican on the panel, Sen. Mike Crapo, R-Idaho, insisted that “over the years, I think that the IRS budget has pretty much kept up with inflation.”

The Biden administration has proposed a 14% funding increase in the IRS budget for the current fiscal year and sought an additional $80 billion increase over 10 years as part of its now-stalled Build Back Better plan.

But Congress has yet to act on the fiscal year 2022 budget, passing a series of temporary spending measures that have effectively frozen IRS funding at 2021 levels. And although there have been signs that a longer-term deal is in the works, Republicans have warned that any significant IRS spending increase would be a “poison pill” that they would oppose.

Source: NPR

by Larson Accounting

15 de April de 2022

Deputy Secretary of the Treasury Wally Adeyemo and IRS Commissioner Charles P. Rettig traveled to the IRS Campus in Philadelphia where they thanked employees for their tireless efforts and outlined an aggressive plan that will end the pandemic backlog this year.

“Since the pandemic began, IRS employees have been called on to go above and beyond for the American people, and they have met the moment. But they’ve had to do so without adequate resources and funding, which is why the agency faces the challenges that it does today. The Biden Administration is committed to getting the IRS the stable, long-term funding it needs to be able to serve the American people,” said Deputy Secretary Adeyemo.

This year, millions of taxpayers are awaiting the processing of their tax returns and receipt of their refunds. The backlog—unprocessed returns and correspondence sent to the IRS but yet unanswered—has created one of the most challenging tax filing seasons in our nation’s history.

“IRS employees have been working tirelessly to process backlogged returns and taxpayer correspondence. To ensure inventory is back to a healthy level for next filing season, we are leaving no stone unturned—taking an all- hands-on-deck approach to ensure as many employees as possible are dedicating time to return processing,” said Commissioner Rettig. “This includes bringing on new employees and reassigning current IRS employees to process inventory.”

The IRS’s backlog challenges today stem from two key sources.

First, the agency has been chronically underfunded for more than a decade, with its budget cut by nearly 20% since 2010. Today’s historically low level of funding means that the IRS isn’t equipped to provide the American people the service they deserve. This is all a result of resource constraints: The IRS workforce is the same size it was in 1970, though the U.S. population has grown by 60 percent and the complexity of the economy has increased exponentially. In the first half of 2021, fewer than 15,000 workers handled nearly 200 million calls received, which translates to one person for every 13,000 calls.

Second, the pandemic created a unique set of new operational challenges for the IRS. The agency was called upon to support emergency relief for taxpayers, like distributing an unprecedented three rounds of Economic Impact Payments, totaling over $830 billion, to 85% of American households. Including individual refunds, the IRS has distributed over $1.5 trillion to Americans since the pandemic began. This was all done at a time when the IRS budget was at historic lows, and while adjusting operating protocols to ensure the IRS workforce was safe and healthy in the midst of the pandemic.

These circumstances have created significant challenges. Entering a normal filing season, the IRS typically has well under one million pieces of inventory. This year, the IRS entered the filing season with a backlog that is more than 15 times as large. This has a huge impact on people, and Commissioner Rettig has committed to addressing the backlog and returning to normal, healthy levels by the end of this year.

To meet this commitment, the IRS has laid out an ‘all-hands-on-deck’ approach:

HIRING AND SURGING THOUSANDS OF EMPLOYEES TO TACKLE THE BACKLOG

Hiring 10,000 new employees: The IRS today announced plans to hold job fairs across the country in March in Kansas City (March 18-19), Austin (March 24-25) and Ogden (March 31-April 1) with the aim of filling 5,000 open positions in the coming months. Working with Treasury, the Office of Personnel Management, and the National Treasury Employees Union, the IRS recently secured direct hiring authority for these employees, as well as an additional 5,000 new hires to be made over the course of the next year. Congress also helpfully provided hiring flexibilities in the House-passed omnibus to further expedite hiring in critical positions. This will allow for onboarding and training new emergency teams which will begin working on inventory within just a few weeks.

Creating new 700-person surge team to process new returns: The IRS is in the process of shifting approximately 700 employees at the Austin, Ogden, and Kansas City campuses to process original returns. These efforts will address the historically high inventories of paper tax returns. At full capacity, this surge will close millions of cases each month.
Maintaining initial surge team to process amended returns and taxpayer correspondence: The second surge effort builds on efforts earlier in filing season, when the IRS moved hundreds of existing employees with previous experience to address the backlog. The IRS currently has approximately 800 people on this team, which started in February.
Paying overtime to thousands of IRS employees: The IRS has required mandatory overtime for the over 6,000 employees processing original returns. Overtime is also available for approximately 10,000 employees processing amended returns and taxpayer correspondence. In all three submission processing centers, employees are working night shifts to work on return and correspondence processing.
Supporting additional contractor support for inventory: The IRS is quickly pursuing additional contracting options to help with original return processing, including mailroom operations, transcription, and input of paper returns into IRS systems.

INCREASED TAXPAYER ASSISTANCE TO REDUCE PROCESSING DELAYS

Communicating directly with taxpayers to ensure accurate returns: A large share of the backlog stems from small errors by millions of taxpayers on their tax returns, which then require manual review by IRS employees before they can be processed. By helping taxpayers file accurately, the IRS can ensure that refunds are issued quickly (an error-free electronic return is processed within 21 days). Accurate individual filings also proactively reduce inventory by decreasing the share of returns that require time- intensive manual attention by employees. Efforts help taxpayers file accurately include:
- Sending taxpayers more information than ever to prevent processing delays. The IRS has sent more than 100 million letters to taxpayers to prevent delays in processing. In the letters, the IRS proactively calculates the amounts received by individual taxpayers in both third Economic Impact Payments and the advance Child Tax Credit to ensure more accurate returns.
- Providing online help. The IRS created and expanded self-service portals for taxpayers, including for online payment agreements, requesting payment transcripts, requesting Identity Protection PINs, and updating personal information. In just the last year, 9.4 million taxpayers have accessed their online accounts, allowing for important information—on benefits received, notices, and taxpayer payment history—to be easily and securely accessed.
- Providing in-person help. The IRS has increased the availability of in-person support for taxpayers through extra hours (including weekends) at Taxpayer Assistance Centers throughout the filing season. It also awarded $41 million of support to over 330 organizations across the United States, including Tax Counseling for the Elderly and Volunteer Income Tax Assistance organizations which provide free federal tax return preparation for the underserved.
- Providing help on the phones. The IRS has expanded customer callbacks to 70% of its toll-free lines. Already this fiscal year, an callback option has been offered to more than three million taxpayers, saving those preparing their taxes almost one million hours of wait time. Additionally, the IRS has deployed 2,000 contractors to respond to taxpayer questions about Economic Impact Payments and the advance Child Tax Credit. Since the summer of 2021, these contractors have answered over 40 million calls.

DEVELOPING AND DEPLOYING UPDATED TECHNOLOGY TO AUTOMATE FUNCTIONS

New automated tool to correct return errors: Last filing season, any error on a tax return required manual review by an IRS processing employee, meaning that just a few dozen such returns could be processed each hour. For this filing season, the IRS developed an automated tool that dramatically expands efficiencies and has helped the IRS close 1.5 million error resolution cases in a single week.
Suspension of dozens of common notices to prevent inventory increases: To provide relief for taxpayers, the IRS reconfigured its systems to temporarily halt sending approximately 40 form notices to taxpayers, including mailing automated collection notices that are normally issued when a taxpayer owes additional tax, and the IRS has no record of a taxpayer filing a return. This action provides important relief for taxpayers who otherwise could have received a notice for taxes already paid, but not processed due to the backlog. Importantly, this also results in less inventory since taxpayers won’t contact the IRS to inquire about the notices received.
Improving automated tools for taxpayer assistance: The IRS developed new automated support technology to help taxpayers, including online live assistance and new voice and chat bots (in English and Spanish) to quickly answer taxpayer queries. Taxpayers’ use of automated services more than doubled in the last year. The improvement of automated phone assistance and other tools has allowed the IRS to move many phone service representatives to work inventory given the exigencies of this filing season.

Ultimately, these approaches are short-term salves for 2022’s tax season but don’t address the much deeper structural problem at the IRS. Had Congress funded the IRS adequately for the past decade, it would have entered the pandemic with the resources it needed – and would not have millions of tax returns waiting to be processed. The IRS and Treasury have worked closely with legislators to highlight these needs, and this year’s House-passed omnibus represents the largest funding increase for the agency in the last two decades. This is a meaningful step that will help the IRS hire thousands of new employees and secure contractor support that will expedite the processing of returns and correspondence.

But it is far from sufficient. The agency needs stable, long-term funding to be able to modernize outdated technological infrastructure and transition much of its manual work into automated processes that will be more efficient. IRS employees should not be hand-transcribing paper returns. Taxpayers should interact with the agency using state-of-the-art online tools. And every taxpayer who wants to call the IRS with a question should have their call and questions answered promptly. Providing the IRS the resources it needs to rebuild and modernize into the 21st century is critical to ensuring that the agency is able to serve the American people and the nation.

Source: U.S. DEPARTMENT OF THE TREASURY