Delayed Guidance is Source of Confusion this Tax Filing Season, AICPA Tells U.S. Senate in Testimony

The American Institute of CPAs (AICPA) conveyed its members’ reports about the problems they are encountering when filing clients’ 2016 tax returns in the testimony it submitted for the record of the Senate Finance Committee’s April 6 hearing entitled, The 2017 Tax Filing Season: Internal Revenue Service Operations and the Taxpayer Experience. 

“We hear a resounding echo of confusion from tax practitioners as our members advise clients and continue to work on filing 2016 returns,” the AICPA stated in its testimony. 

“The issuance of delayed guidance has been a significant factor since it increases compliance uncertainty,” the AICPA wrote.  “As a result, many taxpayers are in a state of confusion regarding not only how to comply with this season’s new rules but also how to proceed with tax planning,” the AICPA stated.

The AICPA made specific recommendations in the following areas where it believes legislative changes can help improve future filing seasons:

• IRS Taxpayer Services – Establish a new dedicated practitioner services unit to centrally manage the many current, disparate practitioner-impacting programs, processes and tools;
• Information Reporting and Forms 1099 – Provide a de minimis error safe harbor for taxpayers;
• Individual Taxpayer Identification Numbers (ITINs) – Allow overseas taxpayers to use community-based Certifying Acceptance Agents to obtain or renew their ITINs, as proposed in the Tax Technical Corrections Act of 2016, which the AICPA believes should be reintroduced;
• Due Diligence Requirements – Consider whether the information obtained from Form 8867, Paid Preparer’s Due Diligence Checklist, warrants the added administrative burdens to professional tax preparers and the IRS;
• IRS Deadlines Related to Disasters – Encourage Congress to grant IRS the authority to postpone certain deadlines in response to state-declared disasters or state of emergencies;
• Guidance Needed on Emerging Issues – Urge Congress and the IRS to develop simplified tax rules and related guidance in the emerging sharing economy and crowdfunding areas;
• Tax-Related Identity Theft – Consider alternatives to reduce the need for submitting personal identification data (such as drive license numbers) in the tax compliance process beyond the personal data traditionally requested (Taxpayer Identification Number, address, employer, etc.); and
• IRS Private Debt Collection – Repeal requirement that IRS use private debt collection agencies.