Advocacy
A key purpose for NAEA is advocacy for state and federal efforts to support fair tax policy and tax administration initiatives.
NAEA aims to be the leading voice with governing bodies to address member challenges and effect change.
Advocacy is the heart of NAEA and one of the association’s most valued member benefits by:
NAEA works to develop policy priorities that reflect the intersection of what EAs are facing in their everyday practices and the realities of where we as an association can move the needle and impact change with Congress, the IRS, and beyond.
Modernizing the IRS
Congress provided IRS nearly $60 billion to modernize its infrastructure and reinvent how it provides services to taxpayers and tax professionals. IRS Commissioner Danny Werfel indicated his goal is to transform the agency for the 21st century by meeting taxpayers and tax pros where they are, supporting them to meet their obligations, and making tax administration work better.
Given the magnitude of the investment, Congress has a key role to play in providing oversight, support, and guidance, and ultimately in holding the IRS accountable for creating and executing a plan that in fact provides a more efficient and customer-focused taxpayer experience.
Tax professionals, in particular, play an outsized role as intermediaries between the IRS and more than half of all filers. If IRS aims to create an efficient, customer-centered tax administration system, it would be wise to leverage tax professionals by providing tools for accessing client tax data and communicating with the IRS on behalf of taxpayers.
While the agency has started to update its systems, we believe the IRS and related congressional oversight must focus on the following:
Problem: The Taxpayer Bill of Rights clearly states taxpayers have a right to representation. Yet the current system for powers of attorney (POA) and taxpayer information authorization (TIA) requests fails to meet taxpayer or tax pro needs. Despite IRS’ recent efforts to improve Tax Pro Accounts and link to CAF, tax pros still lack a comprehensive, scalable online account with integrated digital communication tools to access tax information and services.
Solution: The IRS must redesign the CAF function to create frictionless, omnichannel POA and TIA processes (e.g., through fax, the Document Upload Tool, or an API for volume submissions/withdrawals). It also must provide tax pros and trusted practitioner firms user-friendly, instant and secure access to taxpayers’ transcripts, and the ability to manage powers of attorney online.
The agency should redouble efforts around the Tax Pro Account. Tax pros need to fully understand a taxpayer’s issues and work with the IRS to resolve them. The IRS also must test and focus group with tax pros and tax professional organizations to ensure the tools they launch are functional and meet the needs of tax pros and their clients. The Taxpayer Advocate Service (TAS) and Electronic Tax Administration Advisory Committee (ETAAC) have both called on the IRS to enhance Tax Pro Accounts, adding access to self-assistance and digital communication tools and allowing authorized representatives access to all their clients’ tax records.
Problem: That paper is a problem for IRS has been well known for decades, starting with 1990s initiatives to increase e-file usage. The COVID-19 pandemic-driven paper backlogs, however, drove home the depth of the problem even when 94% of taxpayers e-file their returns. While the IRS has made strides in automation and e-filing, it still handles far too much paper. Some forms (e.g., amended quarterly employer’s returns (Form 941-X) can only be filed on paper, while others (amended income tax returns (Form 1040-X) and prior year individual returns) can only be e-filed for limited years and are processed manually. The processing backlog associated with amended returns and paper filings results in refund delays for millions of taxpayers.
Solution: Few would disagree that a modernized, customer-focused IRS requires automation in all areas of the agency. While we applaud IRS’ paperless processing initiative, many of its processes lack automation on the back end or adequate functionality for tax pros. For example, the IRS’s Document Upload Tool provides taxpayers and tax pros with the ability to electronically upload documents but lacks scope as well as an automated backend workflow process and requires IRS employees to manually process all submissions. It also lacks an adequate certification of receipt that US Mail provides.
Problem: Anyone may set up shop as a paid federal tax return preparer because IRS lacks authority to set and enforce minimum standards. The vacuum creates opportunities for states to create widely differing standards. Further, the National Taxpayer Advocate (NTA) and the Government Accountability Office found unlicensed preparers commit more errors resulting in a loss of tax revenue. The lack of minimum standards exposes taxpayers to potential tax deficiencies, penalties, lost refunds, or other mistakes. The NTA raised the issue in her 2023 annual report, stating, “[t]his lack of authority is harming taxpayers and jeopardizing quality tax administration.” Both the Trump and Biden administrations have supported oversight of return preparers in their annual Blue Book proposals.
Solution: Congress should give IRS authority to require tax preparer minimum standards, including a competency exam, continuing education, and a background check. Paid preparers should be required to obtain a preparer tax identification number (PTIN), pass an examination covering basic Form 1040 tax questions, and lose the right to prepare tax returns for serious malfeasance.
Legislation: In 2021, Representative Jimmy Panetta (D-CA) and then-Representative Tom Rice (R-SC) introduced H.R. 4184, the Taxpayer Protection and Preparer Proficiency Act. According to Mr. Panetta, who continues to work the issue, “[m]istakes by incompetent tax preparers have led to many taxpayers getting audited or penalized through no fault of their own … [a]nybody who pays for their taxes to be prepared deserves to know that their tax preparers are professional, proficient, and principled and, if not, will be held accountable by the IRS.”
Problem: In response to COVID-19, the IRS temporarily suspended liens and levies, and nearly a year later, it responded to a backlog of original/amended tax returns and other correspondence by suspending a dozen additional letters, including non-filer notices and Automated Collection System (ACS)-generated notices issued when a taxpayer owes additional tax. Extraordinary times called for such measures, yet IRS’ return to normal operations has been too slow. Inconsistent enforcement undermines compliance and harms both taxpayers and tax administration. And while in recent months, the IRS began to resume much of its taxpayer communication and compliance notices (e.g., a January initiative to begin mailing letters alerting failure to file a tax return), more work is needed to provide balanced enforcement.
Solution: Narrowly, resuming the Federal Levy Program would show taxpayers the consequences of ignoring tax debts. More broadly, IRS should issue enforcement notices in a steady cadence in all areas of exam and collection. And if facing operational challenges, IRS should still send “soft notices,” which notify taxpayers of actual or potential noncompliance and prompt them to address issues voluntarily, and place alerts of these notices in taxpayers’ online accounts.
Over three days, gain insights from policymakers, IRS experts, and DC thought leaders about Congress and its implications for enrolled agents.
Join your colleagues and NAEA and connect with congressional offices on industry-relevant issues during our visit on Capitol Hill. This event offers members a distinct chance to engage with fellow EAs, advocate for our industry, and actively participate in the political process.
IRS Launches New Effort Aimed at High-Income Non-Filers (March 2024)
In a letter to IRS Commissioner Danny Werfel last October, NAEA offered the enrolled agents perspective on the agency’s significant cutback to compliance initiatives and requested IRS start sending reminder notices immediately to non-filers and those with balances due in excess of $10,000.
IRS Announces Delay in Form 1099-K Reporting Threshold for Third Party Platform Payments in 2023 (November 2023)
NAEA asserted the $600 threshold is too low and will lead to taxpayer confusion around which transactions are taxable income and which are more personal and non-taxable. The $600 threshold creates a high compliance burden for small businesses and taxpayers. As a result, IRS plans for a threshold of $5,000 for 2024 to phase in implementation.
IRS Launches Paperless Processing Initiative (August 2023)
The announcement comes as the IRS has been under pressure from NAEA and other stakeholders to show progress in their efforts to modernize the agency and improve customer service with the influx of funding from the Inflation Reduction Act. The paperless processing initiative gives taxpayers the option to go paperless for IRS correspondence by the 2024 tax season and allowing the agency to achieve paperless processing for all returns by the 2025 tax season.
