IRS Advisory Council Public Report 2019-
For the IRS annual report 2019, with the active assistance of current and former members of the Internal Revenue Service Advisory Council (IRSAC) and the Information Reporting Program Advisory Committee (IRPAC), and the Advisory Committee on Tax Exempt and Government Entities (ACT), there was a consolidation of the three Federal Advisory Committee Act (FACA) advisory groups that report to the Commissioner: the IRSAC, the IRPAC, and the ACT into a single group under a larger and reconstituted IRSAC.
Also, the new IRSAC includes four subgroups reflecting the four business operating divisions (BODs) of the IRS: Large Business and International (LB&I), Small Business/Self-Employed (SB/SE), Wage & Investment (W&I) and Tax Exempt & Government Entities (TE/GE).
The objective of this article is to provide you with a summarization of everything that was covered in the IRS annual report 2019.
Subgroup Reports – Summary of Issues Discussed
The following is a summarization of all the issues discussed:
The Small Business/Self-Employed (SB/SE) Subgroup
This subgroup was chaired by James Paille, who made recommendations on:
- The Form W-4 2020 version.
- The effectiveness of guidance, Qualified Business Income, and most important, outreach for 199A.
- The sharing economy and impact on the tax gap.
- Updating “Small Business Taxes: The Virtual Workshop”.
- Reporting issues faced by issuers and Applicable Large Employers (ALE) under the Affordable Care Act (ACA).
- Form 1099-NEC.
- For guidance for “On-Demand Payroll”.
- Most important, increasing compliance through the alignment of Form 945 to amounts reported on Forms 1099.
The Wage & Investment (W&I) Subgroup
This Subgroup was chaired by Phyllis Jo Kubey, who made recommendations on:
- Firstly, improving customer experience and service delivery.
- Providing feedback on the IRS initiatives for earlier intervention with 1040 taxpayers who have underreported wage income on their tax returns.
- Prioritizing the electronic filing of the 1040X.
- Improving the marketing, promotion, participation of VITA/TCE programs and other services.
- Finally, improving specific forms and filings particularly Form 1040NR and Form 1040NREZ.
The Tax Exempt & Government Entities (TE/GE) Subgroup
Chaired by Jean Swift, who made recommendations on:
- Broadening and improving a self-correction program for tax-exempt bonds (TEB).
- Improving the accuracy of Form 990 filings (EO).
- Above all, changing the IRS advisory opinion process to improve transparency and compliance for employee plans (EP).
The Large Business and International (LB&I) Subgroup
Chaired by Diana Erbsen, who made recommendations on
- Firstly, the IRS offers an issue by issue an opportunity to qualifying taxpayers to address specified issues in a given tax year by extending elements of the Compliance Assurance Process (CAP) program.
- Establish safe harbors by relying on certain conclusions of independent parties.
- Finally, adopt and implement specific information reporting guidance, including relating to the TCJA.
Issues addressed in the IRSAC’s yearly free credit report IRS typically represent topics identified by members as broad and Service-wide and that do not fall under the purview of any subgroup. This year, the IRSAC identified six issues:
- The continuing need for Congress to provide the IRS adequate and reliable funding. Doing so helps the IRS fulfill its core service, compliance, and enforcement missions.
- Accelerating the use of e-signatures in federal tax administration.
- The need to proceed with an efficient and educational approach to the penalty program.
- The continued dedication of the IRS to issue guidance as a result of the Tax Cuts and Jobs Act.
- Maintaining the hiring of attorneys in the Office of Professional Responsibility (OPR).
- Above all, improving the Free File program by increasing IRS oversight and restructuring the Memorandum of Understanding.
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Finally, this year’s report includes a summary of last year’s achievements entitled, “Progress on IRSAC / IRPAC / ACT 2018 Recommendations.” The IRSAC hopes that highlighting its achievements from the prior year will help publicize the IRSAC’s valuable contributions to effective tax administration and encourage various stakeholders. In addition, this includes professional organizations to engage with the IRSAC in connection with their own efforts to improve tax administration.
Progress on IRSAC’S 2018 Recommendations
The IRSAC made 16 primary recommendations and additional sub-recommendations in its 2018 annual report. As of July 2019, the IRS had implemented or was implementing, several of the IRSAC’s recommendations from 2018. Included among the fully and partially implemented recommendations were:
- Firstly, coordinating and improving real-time IRS communications and various electronic communications to tax professionals.
- Continuing to elevate the urgent need for legislation authorizing the Treasury Department to establish and enforce minimum standards of competence for tax return preparers.
- Providing IRSAC a timelier implementation status of prior year’s issues.
- Continuing focus on implementing and streamlining the eA3 Rule.
- Expanding the use of Application Program Interfaces (APIs).
- Prioritizing the implementation of the online Tax Pro Account.
- Encourage taxpayers to pay their taxes electronically and provide additional education and outreach on the importance of using Lockbox addresses.
- Informing the practitioner community about the risks of fraud and ways to reduce their risk of stolen tax pro data.
- Educating taxpayers and tax practitioners, as well as collecting and analyzing data on the Taxpayer Digital Correspondence Pilot program.
- Additionally, providing more direct guidance with regard to best practices and common flaws in transfer pricing documentation.
- finally, using the Country-by-Country (CbC) reports and monitoring the information from these reports for transfer pricing risk assessment.
Progress on IRPAC’S 2018 Recommendations
The IRPAC made five general recommendations and 41 recommendations from subgroups in its 2018 annual report. Furthermore, as of July 2019, the IRS had implemented or was implementing, several of the IRPAC’s outstanding recommendations from the 2018 report. So, included among the fully and partially implemented recommendations were:
- Firstly, providing effective guidance as timely as possible so that all industry-wide information reporting issues can be addressed as a result of the Tax Cuts and Jobs Act.
- Secondly, updated instructions to IRS Form 1099-MISC to make it clear that scholarship and fellowship grants may have to be reported on IRS Form 1098-T.
- Implementing good faith penalty relief for reporting of incorrect or incomplete Forms 1095-B and 1095-C and a 30-day delay in filing the 2018 forms.
- Improvements to the FIRE system for electronic filers of certain information returns.
- Updated Forms W-9 and Notices CP-2100/2100A to reflect the current backup withholding rate.
- Finally, reinstating the IRS Form 1099-NEC for the tax year 2020.
Progress on ACT’S 2018 Recommendations
The ACT made five primary recommendations in its 2018 annual report. As of July 2019, the IRS had implemented or was implementing, several of the ACT’s recommendations from 2018. Included among the fully and partially implemented recommendations were:
- Recommendations regarding re-opening the determination letter program in certain.
- Recommendations regarding missing participants.
- Suggestions regarding incentivizing universal e-filing for Form 990.
- Encouraging self-compliance by issuers to tax-advantaged obligations.
We hope that this article has provided you with all the information that you were looking for regarding the IRS annual report 2019. In case you happen to be harboring any further queries, feel free to get in touch with our experts at Accounts Confidant.