IRS Interviews APA
for Strategic Plan
By Alice P. Jacobsohn, Esq.
APA Government Relations staff spoke with employees in the IRS's Office of Planning, Programming, and Audit Coordination on December 6 regarding the agency's strategic plan for fiscal years 2018 to 2022. Members participating on APA's Government Relations Task Force Subcommittee on IRS Issues compiled recommendations that APA presented to the agency.
Before the meeting, the IRS provided a list of questions regarding short- and long-term issues that the agency should address, agency strengths and weaknesses, defining success, and trends that could impact tax administration.
IRS Strengths, Weaknesses
- The IRS should provide employers with direct access to knowledgeable IRS employees for guidance. This includes use of a chatroom or designated email to submit questions and receive answers. The IRS hires temporary workers to answer questions during the tax-filing season. However, employers require assistance throughout the year because of quarterly filing requirements. In addition, successful payroll professionals prepare throughout the year for year-end filing and may have questions along the way.
- Technology at the IRS requires improvement. All employers should have access to e-filing options. To file Form 941 electronically requires a third party. In addition, more self-help systems are needed, and the electronic systems that are available should be streamlined to talk to each other.
- As IRS employees retire or shift positions and new employees are hired, succession planning to prevent a knowledge gap is extremely important. This is even more crucial when IRS funding is tight. The agency should identify individuals with leadership skills and cultivate them for future advancement.
In general, APA members believe that IRS employees perform their work with honesty, integrity, and passion despite significant outside negative pressure. The IRS is an easy target for politicians, yet it is a pivotal agency for the overall success of the federal government. In addition, the IRS has made a concerted effort to become more transparent in its plans. To accomplish its mission, the agency requires significant additional funding.
APA encouraged the IRS to continue its commitment to security to prevent identity theft and tax fraud. These efforts include the IRS's Security Summit through which APA representatives share information on payroll management practices and security risks. APA Security Summit representatives include Stephanie McAtee, CPP, serving on the Information Sharing Work Group, and Stephanie Salavejus, CPP, on the Strategic Threat Assessment and Response (STAR) Work Group.
The problem for reform legislation is accommodating the different interests of the Democratic and Republican parties. Senator Lamar Alexander (R-Tenn.), Chair of the Senate Committee on Health, Education, Labor, and Pensions, stated that he wants to scale back federal regulations on colleges and streamline student aid programs. Other Republicans are pushing for reduced federal involvement in financing students with an assumption that the private sector will play a greater role. Conversely, Democrats want the federal government to engage further by forcing colleges to reduce their costs and directly assist students in paying off their loans.
Over the past few years, the IRS has increased efforts to engage stakeholders through IRS advisory committees, the monthly payroll stakeholder telephone conference calls, and high-level meetings on specific issues, such as compliance with the Affordable Care Act. APA members believe that the IRS could do a better job of recognizing that someone at every place of employment is responsible for payroll whether the payroll function is managed in-house or outsourced.
In some instances, the IRS designs a program and then asks stakeholders to participate, but this is still a significant improvement from the past when the agency was less transparent. With regard to the IRS's strategic plan, APA recommended that the agency consider consulting stakeholders earlier in the planning stages of programs. For example, the IRS recently announced how small businesses can use Form 941 to claim the research and development tax credit as a payroll tax credit. However, the implementation process creates a high risk of penalties for miscalculating, which essentially prevents employers from taking advantage of the opportunity. Increased stakeholder input might have prevented this result.
Some APA members noted that the future workforce will include a greater number of employees earning employment income from multiple employers, which can impact tax filing and information reporting. This trend has been the subject of many news articles by Forbes and Bloomberg. They see millennials wanting more flexibility in their work schedules. In addition, more employers are expanding operations across states and globally. The tax forms and instructions are too complex for these trends, especially for businesses expanding for the first time.
For example, when APA filed comments on IRS Form 1042-S Foreign Person's U.S. Source Income Subject to Withholding, and related instructions on December 5, most of the recommendations focused on reducing complexity. Topics included differences between original, revised, and substitute forms, use of status codes, and confusion regarding the information required for different boxes.
An IRS report on stakeholder interviews is scheduled to go to agency leadership this month. The strategic plan will take longer for the agency to complete and will require U.S. Department of the Treasury agreement. The plan is scheduled for release in 2018. Alice P. Jacobsohn, Esq., is Senior Manager of Government Relations for the APA.