AICPA Calls for Improvements to IRS Examination Program to Relieve Taxpayer Burdens
The American Institute of CPAs has raised a number of concerns with the Internal Revenue Service about the burden its correspondence audit program places on taxpayers selected for examination, Patricia Thompson, the chair of the AICPA Tax Executive Committee, told the IRS Oversight Board at a meeting today.
“AICPA members are very familiar with the difficulties and challenges taxpayers have faced with correspondence examinations,” Thompson said. She said CPAs have identified the following problems that the AICPA has urged the IRS to correct:
· The excessive time it takes IRS to resolve cases.
· The difficulties taxpayers face when trying to contact the IRS about the status of their cases.
· The numerous telephone inquiries made by taxpayers or their representatives that are not returned by the IRS.
The IRS uses correspondence audits to obtain additional information from taxpayers about a few limited issues on the taxpayer’s return. Correspondence audits are generally narrower than a traditional audit of a taxpayer’s return and are conducted via written communications.
Thompson recommended that the IRS conduct an internal review to determine if the correct types of returns are being selected for review under the correspondence audit program.
She said, “Taxpayers are often requested to substantiate specific tax deductions like miscellaneous itemized deductions, state and local income taxes, and real estate taxes.
“However, it appears that the IRS may be making this substantiation request to a large number of taxpayers who happen to be in an alternative minimum tax position, with these types of deductions having no impact on the taxpayer’s ultimate tax liability. The net result is a ‘no-change’ audit for the taxpayer and a waste of resources for the IRS. We suggest that the IRS create an additional ‘filter’ for its correspondence audit selection process to remove these types of case from the Service’s active case file.”