WILL THE IRS REALLY SPEED UP THEIR SYSTEMS? IT’S ABOUT TIME.

by Steven Sodini 27. December 2011 15:05
  Current IRS Commissioner Doug Shulman has indicated that he wants to create a real-time tax system.  That’s…umm…a great idea. If you have corresponded with the IRS via phone calls or through the USPS, you obviously know that their response time is painfully slow.  Also, many taxpayers are in disbelief when they get a notice or some communication from the IRS months or maybe more than a year after filing their tax return.  So, any way to speed up the tax system in general will come as a welcome relief to taxpayers.  The following statement from Mr. Shulman shows that he is very aware of how slow the system works. “In general, people file a return, it processes through the system, and then a lot of the work of tax administration happens a year or two after filing.  So if there's a mismatch that we find from an information return, we'll send a letter out six, nine or 12 months after the return is filed.  If we flag a potential problem on a return, our exams often occur a year or two after the return is filed, and the return is after the economic activity took place, so often the exam is several years after the actual economic activity reflected on the return.  That's why I've laid out a vision for a more real-time tax system, and the broad outline of that is having a tax system in which we load our system with information returns before the filing occurs.  We do a lot more matching work, potentially blocking work, and helping taxpayers correct their return as it comes in.  Consequently, instead of interacting with people after the fact, which is quite burdensome, we get accurate returns in the first place.  If this is executed correctly, and this is a long-term execution, we would see a tax system with a lot less burden on the American taxpayers and with much higher compliance.” (You can read more about what Mr. Shulman has to say here --- http://www.accountingtoday.com/news/IRS-Plans-Public-Meetings-Real-Time-Tax-System-60930-1.html --- and here --- http://www.accountingtoday.com/news/IRS-Commissioner-Doug-Shulman-Real-Time-Tax-System-60702-1.html.) As great as this plan sounds, I anticipate that it is likely to have setbacks and delays.  Dealing with the IRS without a delay just wouldn’t seem normal, right?  I applaud Mr. Shulman’s progresive thinking, and look forward to a real-time tax system, but, knowing how slowly the IRS has operated in the past, I wouldn’t expect a real-time tax system for a good while.
Categories: Tax