Small businesses blast IRS over new tax credit announcement
Small businesses are crying foul after the Internal Revenue Service announced it would delay processing of a key tax credit, the latest in a series of delays for the agency. The IRS announced it will significantly slow its processing of Employee Retention Tax credits that have already been filed and not accept any new claims of this kind until next year. The agency says a flood of fraudulent attempts means it will have to take extra care to avoid fraud. The tax credit was meant to help businesses and nonprofits hold on to employees during the pandemic. Now, Small businesses say the IRS moving slowly means they will pay the price. “The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in,” IRS Commissioner Danny Werfel said in a statement. “The further we get from the pandemic, the further we see the good intentions of this important program abused. The continued aggressive marketing of these schemes is harming well-meaning businesses and delaying the payment of legitimate claims, which makes it harder to run the rest of the tax system. This harms all taxpayers, not just ERC applicants.” The National Federation of Independent Business, a leading small business group, blasted the IRS after the announcement, “While misleading marketing for the Employee Retention Tax Credit remains a problem, the IRS should not penalize the hundreds of thousands of small businesses that have followed the eligibility rules, correctly filed claims, and need help now,” Kevin Kuhlman, NFIB Vice President of Federal Government Relations, said in a statement. “NFIB has heard from many small business owners who are frustrated by the delays in processing claims and lack of communication from the IRS.” A recent NFIB survey found that small businesses are already hurting, in large part because of rising inflation. According to federal data, inflation spiked in August well beyond expectations. The NFIB poll of small business owners found that they cite inflation as their number one business concern, more than the labor shortage or anything else. Pandemic-era fraud led to hundreds of billions of dollars being taken from taxpayers across several government programs. Werfel, citing this kind of concern, seemed to suggest that processing could be delayed even further if needed to avoid fraud. “For those people being pressured by promoters to apply for the Employee Retention Credit, I urge them to immediately pause and review their situation while we look to add new protections and safeguards to stop bad claims from ever coming in,” Werfel said. “In the meantime, businesses should seek out a trusted tax professional who actually understands the complex ERC rules, not a promoter or marketer hustling to get a hefty contingency fee. Businesses that receive ERC payments improperly face the daunting prospect of paying those back, so we urge the utmost caution. The moratorium will help protect taxpayers by adding a new safety net onto this program to focus on fraudulent claims and scammers taking advantage of honest taxpayers.” Kuhlman said the IRS delay will only make things harder on small businesses. “By further delaying the processing of existing claims, the IRS is making it more difficult for small businesses to operate, keep employees, and create jobs,” Kuhlman said. Republished with the permission of The Center Square.
IRS to end unannounced visits to taxpayers
The Internal Revenue Service said Monday it will end most unannounced visits to taxpayers by agency revenue officers to reduce confusion and improve safety for taxpayers and employees. IRS Commissioner Danny Werfel said the change was part of an effort to transform operations after the passage of the Inflation Reduction Act in 2022. “We are taking a fresh look at how the IRS operates to better serve taxpayers and the nation, and making this change is a common-sense step,” Werfel said in a statement Monday. “Changing this long-standing procedure will increase confidence in our tax administration work and improve overall safety for taxpayers and IRS employees.” The change reverses a decades-long practice by IRS revenue officers – the unarmed agency employees whose duties include visiting households and businesses to help taxpayers resolve their account balances by collecting unpaid taxes and unfiled tax returns. The unannounced visits will end effective immediately, except in a few unique circumstances, and will be replaced with mailed letters to schedule meetings, according to the agency. The National Treasury Employees Union backed the decision. “NTEU welcomes the IRS decision to halt unannounced visits by IRS Field Collection employees,” National President of the National Treasury Employees Union Tony Reardon said in a statement. “The safety of IRS employees is of paramount importance and this decision will help protect those whose jobs have only grown more dangerous in recent years because of false, inflammatory rhetoric about the agency and its workforce.” The IRS noted that there have been increased security concerns, including an increase in scam artists bombarding taxpayers raising confusion about home visits by IRS revenue officers. In other cases, scam artists have appeared at a taxpayer’s door posing as IRS agents. “These visits created extra anxiety for taxpayers already wary of potential scam artists,” Werfel said. “At the same time, the uncertainty around what IRS employees faced when visiting these homes created stress for them as well. This is the right thing to do and the right time to end it.” Instead of unannounced visits, revenue officers will make contact with taxpayers through an appointment letter, known as a 725-B, and schedule a follow-up meeting. Taxpayers whose cases are assigned to a revenue officer will be able to schedule face-to-face meetings at a set place and time. The IRS said there will still be “extremely limited situations where unannounced visits will occur.” “These rare instances include service of summonses and subpoenas; and also sensitive enforcement activities involving seizure of assets, especially those at risk of being placed beyond the reach of the government,” the agency said. “To put this in perspective, these types of situations typically number less than a few hundred each year – a small fraction compared to the tens of thousands of unannounced visits that typically occurred annually under the old policy.” Republished with the permission of The Center Square.
New IRS leader Danny Werfel promises faster, easier tax filing process
New IRS Commissioner Danny Werfel delivered a tax-season pledge Tuesday that the agency will use an $80 billion infusion of cash to become faster, more tech-savvy, and provide “real-world improvements” to taxpayers. Werfel, as he was ceremonially sworn in on Tuesday, said he would release a Strategic Operating Plan later this week laying out how the agency will use the money approved in last year’s Inflation Reduction Act “This is our moment in history to transform the IRS,” said Werfel, who began working at the agency in mid-March. “We have a great deal of work ahead of us to ensure a more modern and high-performing IRS that provides world-class services to taxpayers,” he said. Some of the planned improvements include hiring more people to end long call wait times, additional locations for IRS staff to provide in-person service, and expanded online accounts, so taxpayers and professionals will be able to address tax issues through electronic means, instead of paper mail. President Joe Biden nominated Werfel to steer the IRS as it receives the new funding, which has come with much political consternation. Republicans have suggested without evidence that the agency would use the new money to hire an army of tax agents with weapons. They also say the IRS would increase audits on middle-class taxpayers. Werfel navigated some of that controversy during his February confirmation hearing. He pledged before senators not to expand tax audits on businesses and households making less than $400,000 per year, as he faced rounds of questions before the Senate Finance Committee on how he would spend the agency’s big new infusion of money. He drew praise for being willing to leave a private consulting job to take on the top job at the troubled agency. Werfel formerly led Boston Consulting Group’s global public sector practice and has previously served as an acting IRS commissioner. Treasury Secretary Janet Yellen, who presided over Werfel’s swearing-in, said in a speech to IRS and Treasury employees that he will be tasked with “dramatically improving taxpayer service and ensuring that large corporations and the wealthy pay the taxes they owe.” “The IRS will invest in data and analytics to help the agency audit large corporations, high earners, and complex partnerships that have not paid their full bill,” Yellen said. “The technology will be complemented by hiring more top talent – including accountants and attorneys.” While the administration has showcased the boosting employee ranks with 5,000 new workers and investments in new technology, a March Treasury Inspector General for Tax Administration report on the 2022 tax season states that the “ongoing backlogs of tax returns and other account work continued to challenge the IRS during the 2022 Filing Season.” In a March 13 letter to employees, Werfel said, “I returned to government to work with you and focus on this tremendous opportunity we have with the resources available under the Inflation Reduction Act.” Republished with the permission of The Associated Press.
