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Federal Tax Day – Current, I.1, Koskinen Predicts Challenging Filing Season (IR-2014-116; FS-2014-11), (Dec. 19, 2014)

IRS Commissioner John Koskinen predicted a complex and challenging filing season due to cuts in the Service’s funding. “The IRS expects the upcoming filing season to be a very complex one, so it’s more important than ever for people to consider getting help with their taxes, and to choose that help wisely,” Koskinen told reporters at a news conference in Washington, D.C. on December 18. Koskinen highlighted the Service’s having to do more with less because of reduced funding, the complexity of new requirements under the Patient Protection and Affordable Care (PPACA) (P.L. 111-148), and other recent circumstances.

Budget Cuts

The Consolidated and Further Continuing Appropriations Act, 2015 (HR 83) cut the IRS’s fiscal year (FY) 2015 budget by approximately $346 million (TAXDAY, 2014/12/16, C.1). The Service is funded at $10.9 billion for FY 2015, which is $1.5 billion below the amount requested by the White House. The FY 2015 budget reduction “undercuts our ability to enforce the Tax Code,” Koskinen said. “We will do everything we can to protect the integrity of the filing season.” More budget cuts could cause “the wheels to start to fall off,” he noted. One response to funding reductions, Koskinen indicated, would be to furlough employees for one or more days to save money. “That would be the last option.”

Koskinen added that the Service has frozen hiring, with the exception of some mission-critical personnel. “We will have fewer people to initiate audits.” Taxpayers telephoning the Service with questions should anticipate waiting to reach customer service representatives, Koskinen said. Wait times could reach 30 or more minutes, he predicted.

Tax Extenders

The Tax Increase Prevention Act of 2014 (HR 5771) extended through 2014 more than 50 individual, business and energy incentives (TAXDAY, 2014/12/17, C.1). The IRS is re-programing its return processing systems for the year-end tax legislation. “The extenders seem straightforward,” Koskinen said. At this time, it appears the IRS is on track to open the filing season on-time, he added.

PPACA

New requirements under the PPACA are already generating questions from taxpayers, Koskinen reported (TAXDAY, 2014/11/24, I.6). “Most people will only have to check a box on their Form 1040 return to indicate they had health coverage,” Koskinen said. Individuals claiming the Code Sec. 36B premium assistance tax credit and exemption from the individual shared responsibility requirement will have questions. “We are depending on preparer organizations to get as much information to taxpayers as possible,” he added.

Tax Professionals

Koskinen applauded the work of tax professionals. “There are many types of professionals to choose from, including those who are licensed as CPAs, enrolled agents or attorneys. These groups and their members are critical to helping run the nation’s tax system, through the work they do in helping taxpayers prepare and file their taxes each year,” he said. Koskinen reported that some 75-million individuals used paid preparers to prepare their returns last year.

Annual Filing Season Program

The IRS launched the Annual Filing Season Program (AFSP) in June (TAXDAY, 2014/06/27, I.1). Participants in the AFSP who complete continuing education requirements will receive a Record of Completion from the Service.

“We will be offering a new directory on www.irs.gov, which will help taxpayers find tax professionals with credentials or certain qualifications in their local area. The database will be sorted by type of preparer, including CPAs, attorneys, enrolled agents and other preparers, including those who have participated in AFSP,” Koskinen explained. The database is expected to be online in early 2015.

By George L. Yaksick, Jr., CCH News Staff