Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Roger: [00:00:03] Well, hello, everybody. I am Roger Harris with Paget and this is the Federal Tax podcast. And I'm joined by.

Anne: [00:00:11] Annie Schwab, our second podcast. So we are excited to be here today with you guys.

Roger: [00:00:16] Yeah, look, we're excited to have done one and now we're jumping into number two and it's. The start of tax season. We're actually in in the real world of doing taxes now. And, you know, and one of the interesting parts of every tax season is how our and I'll call them partner, the IRS is going to be able to function during tax season. So we thought it would be interesting today to kind of give you a a feel. Coming out of COVID and all the challenges that we've all experienced dealing with the IRS, where do we stand today? What's this filing season going to look like? What's different? What's the same, what's better, what's worse? And so we thought that would be a good. Good topic for us to talk about today. So how are we going to do that? Where are we going to know what to talk about and give them some real world stories?

Anne: [00:01:10] Well, I thought we would start with sort of embracing the idea of a new norm. The past three years have been extremely difficult through COVID. All the changes, all the legislation, all the IRS backlogs and and issues being able to communicate quickly with them, getting refunds, getting returns processed. So fingers crossed this year is going to be much smoother. Perhaps this will be our new norm. But there's been a lot of talk and a lot of chatter of like what we can expect from the IRS or are they going to make improvements this year or, you know, are we going to look at another extension, which I don't think we're going to get? I think the deadline, the 18th is going to be the deadline. But, you know, there's there's concerns coming out of three really tough years has made tax practitioners and tax payers kind of wonder, you know, what are we looking at this?

Roger: [00:02:02] What are we looking at? And in light of getting all this money, is that going to impact this filing season? Is that something for the future? But, you know, I think one of the things that's kind of timely that we'll talk about today is the taxpayer advocate who some of us know from dealing with them for client issues, but we don't really know who the taxpayer advocate is, what their job is, and and why they have an opinion about tax season. So any you want to talk a little bit about first of all, for people who don't know, talk a little bit about the taxpayer advocate and what we're going to be referring to as we talk over the next few minutes.

Anne: [00:02:39] Yeah, I think let's let's start with it was designed in 1996, so been around a long time. Not a long time. I guess it just sort of depends on where you are and in the industry and how long you've been in the industry. But it is designed to be the taxpayer's voice. It is designed to help individuals, businesses, charitable organizations. It's not limited to a certain audience. It's designed to be their voice to help them resolve issues with the IRS. So if you're struggling to get something resolved, a tax matter resolved with the IRS, the taxpayer advocate is out there for you. It is considered a section of the IRS, although it is independent.

Roger: [00:03:23] It is independent, right?

Anne: [00:03:24] It is independent. There's a one 800 number. There's a fax number. I'm sure if you tried to reach them last year, they also had, you know, issues getting through. But it's it's free. It's there's no charge for it. Like I said, anyone can qualify to use it. I suspect that most tax practitioners are familiar with it, at least with, you know, things that they do. For example, did you know that there's a taxpayer Bill of rights that, you know, was came about through the Taxpayer Advocate and the IRS adopted it. But, you know, it's designed to make sure that taxpayers rights and voices are heard. So they put out a report, two reports, actually twice a year. There's a report, the one that we're going to talk about mostly today came out, I want to say, right around Christmas again in December, December.

Roger: [00:04:12] Right.

Anne: [00:04:13] Sort of talks about, you know, what's going on in the past, what can we look for in the future, issues that need to be, you know, brought to attention. So it's an organization, like I said, 1996 hasn't been around forever. But, you know.

Roger: [00:04:31] And it's actually a department and a person. I mean, there's the taxpayer advocates department, but there is also a person who is the taxpayer advocate who is currently Aaron Collins. Right. Many of you probably knew Nina Olson, who was the taxpayer advocate before Erin took it over. And so the Taxpayer Advocate Department and or person, the report we're talking about is their annual report to Congress where the the advocate will look at the IRS. Again, they're independent. They're within the IRS, but they're independent. If you look at the organizational chart, they're kind of stuck over here to the side. They're not really direct report to the commissioner or anything. And their job is to look at the IRS and say, number one, what are you doing right? What are you doing wrong? And then they actually make recommendations to Congress. Turns on what Congress could do or should do to improve the tax system. And as Congress often does, they sometimes ignore those suggestions. But it's a good place to look at kind of where, as we lead into the 2023 filing season, where this independent party from inside the IRS sees where we are, we all know how we see where we think they are. And we'll and we'll bring in some some other comments. So so any where do you want to start? Because it's pretty interesting when you again, first of all, we're going to look back on where she says we are here.

Anne: [00:06:03] This is straight out of the report, so I don't want to I'm going to read it so that I make sure I give accurate information. But I have a feeling most of our listeners are feeling the pain from the last three years. And so here are some stats. They basically provided some information saying this was not up to par. So here they go. Two thirds of individual taxpayers were entitled to refunds and that average refund was 30 $200. Not a big fluctuation from year to year. That's kind of an average enorme average. But the report said that the IRS failed to meet the responsibility to pay timely refunds to millions of taxpayers for the third year in a row. So none of that sounds so positive. Many of us felt that pain for sure 13 million individual taxpayers filed on paper. And because of all of those returns and COVID and staffing processing delays and refunds for these taxpayers were delayed longer than six months. That's a really long time span. The iris is, in general, supposed to generate process much faster than that. 4 to 6 weeks for an e filed return, maybe a little bit longer on paper. So delayed more than six months. I mean, that's that's pretty bad.

Roger: [00:07:20] That's yeah. In fact, they tried to say that if you filed electronically, you get your refund within 21 days. So, yeah, sometimes that didn't always work out.

Anne: [00:07:29] Yeah. Nope. And here you go. This is why millions of the e-file tax returns were suspended because it got tripped up in the iris processing filters. You know, they have these filters in there to sort of identify fluctuations or possible identity theft. And they hold those returns. You know, someone actually looks at them. And so they're saying that a lot of these returns, millions as the word that they use, got tripped up in the iris processing filters. And so it had to be reviewed by an individual employee. Well, we know staffing was horrible, right? The piles of mail were up to here. So clearly that that again, not a great stat for 2020 to hundreds of thousands of business returns that were claiming the employee retention credit was delayed. Now, our pageant franchises felt that pain for sure because those taxpayers, those small businesses were waiting months and months and months to receive their money from the employee retention credit. And if you don't know what the employee retention credit is, Roger and I went into a bit of detail in our first podcast. So that was one of the programs that came out of COVID, and it was particularly for small business owners who were paying wages to employees during the difficult time. So not surprising that again, lots and lots of paper to be opened and addressed by the IRS.

Roger: [00:08:52] Yeah. And if you we talked on the first podcast about how that delay impacted the money, as you talked about coming in 2022 and how that's going to impact the 2022 filing season. So if you've got clients who are going to receive the credit, they probably got hung up on the delay that they're talking about and didn't come to T22 So you probably want to go back and pay attention and listen to that and see what we talked about there.

Anne: [00:09:17] Yeah, Unfortunately, even though you can generate the credit in some of 2020 and then 2021, I would say the majority at least what we see in practice, the majority of taxpayers did not get the money until 2022.

Roger: [00:09:31] Yeah, and you mentioned something that's kind of interesting, the the returns getting held up in a check. And part of that's because our tax system is turned into so much more than a tax system. If you particularly if you go back and think of COVID, how much money was distributed out to individuals and businesses because of the pandemic through the tax code. Yeah. And so you had to know how to file a return. You had to know how to claim the credits, you had to know how to do all those things. And unfortunately, when that kind of money is available, the bad guys step in and create fraudulent returns and do all the things. So the IRS is caught with the responsibility to disperse the money, but also the responsibility to try to catch people who are trying to game the system. So they had to flag a lot of. Turns, make sure that they're the the right person is getting the money and not somebody coming into the system. So our tax system is not just a tax system anymore. There's so much and even in non-covid years from earned income credit to dependent credits to all kinds of credits, some of which can be refunded. Has just created this this system by which there's, you know, like the old guy said, why do you rob banks? Because that's where the money is. Same thing in the tax system. Why do you file fraudulent tax returns? Because there's a lot of free money available and the IRS is criticized if they send it out too slow and then they're criticized if they send it out to the wrong person. So we all kind of get caught up in that.

Anne: [00:11:06] And especially during the last couple of years, the guidance has been so slow to come out that their returns that people generally filed thinking that it was accurate and then later got guidance. You know, we had all, you know, was unemployment taxable or nontaxable? How do you reconcile the stimulus? I mean, it just it kept going on and on. And so, you know, taxpayers were filing returns with thinking it was accurate and then something would come out and it would be retroactive. And so now these returns had to be corrected or was the IRS going to correct them on their own and just send them the refund? I mean, just nonstop last year and the year before, really?

Roger: [00:11:44] Yeah. And so much of this kind of work requires people to be in a physical location. And if we look back during COVID, look how much remote work we were doing and our staff was doing and other companies were doing. And yet the IRS to go process a paper tax return, somebody's got to be in the location to do it. So the challenge of getting people back to work contributed to to what I think are some understandable delays. Yeah, I think we can question whether they went on too long, but certainly we we all understood it for a while and that's I think those are the kinds of things that Advocate is trying to address is, yeah, how we got here and are we doing anything to to get better?

Anne: [00:12:28] Well, let me tell you about talking about people going back to work. The I this is again from 2022, the IRS received 173 million calls, only 22 million. That's roughly 13% got through to the IRS. I don't know about you, but I definitely got one of those polite disconnects from time to time. And so as a result, what what came about was that those who did get through waited an average of 29 minutes, not a horrible time, but you're still at the 13% who got through. So, I mean, you understand the frustration coming from the taxpayers, even the the practitioner priority line. That's a line that is used by practitioners solely by practitioners. Only 16% of those calls went through and again, they waited 25 minutes. So, you know, I understand the frustration and the difficulty. However, I will say that after this report that came in, talking about all the inconsistencies and inaccuracies from 2022, there is some I mean, a little bit of optimism. I mean, the iris did get a big fat check. Well, not a check, but they did get awarded $80 billion. Right? Right. Not not not that it just was a lump sum. It's spread over years to come. But the Advocate and other I've heard through other journals and social media, etc., I mean, there's there's a lot of money to be had and there's there's hopes that if the money is used properly, that backlogged of unprocessed returns will improve and hiring of additional employees to answer the phones. And I think they're at 4000 new customer service representatives and then they're looking to hire an additional like 700 just for the to answer the phones to help with this.

Roger: [00:14:22] And that's yeah, that's an answering the phones. One thing I kind of laugh when I hear a 29 minute average because when you anecdotally, at least when you talk to practitioners and you talk to our office owners, that must be somebody getting an answered in one minute and you're having to wait 60 minutes to make the average throw because I don't know too many people that, you know, a lot of people just got, as you said, got the courtesy disconnect after some period of time. But yeah, I mean, answering the phones one thing, then you got to have the person on the other end of the phone being properly trained. Because the other thing we heard a lot about and we're going to air all the dirty laundry first, is that the person on the other end, when you finally waited, whether it was 30 minutes, an hour or whatever, then they couldn't help you or you were in the wrong department and they had to transfer you and then you got hung up. So huge frustration from tax practitioners, and this is our job. Can you imagine what the poor taxpayers were going through that had no earthly idea? You know, really, they were probably afraid to call the IRS in the first place. And they were nervous and they didn't even know if the person was answering the question on the other end properly or improperly.

Anne: [00:15:38] Right. And that's that has definitely been a high priority, I think, by the Advocate and by the IRS to, you know, to improve that. But again, we.

Roger: [00:15:51] Hopefully.

Anne: [00:15:51] Yeah, fingers crossed they just have to use the money in a way to help the system. And if they can earmark that money, you know, half that money has already been earmarked for enforcement. You know what enforcement is going to mean, how that is going to look, how they will roll that out is still, you know, undetermined. But there's definitely funds that can be used to significantly improve customer service and the online technology, you know, being able to. File. Find out your the status of processing of your return without having to call. You know being able to access prior your returns, source documents. Statuses of notices. All of that stuff without needing a person to answer the phone. That would be amazing.

Roger: [00:16:39] And to credit the IRS and again, I've worked with the IRS kind of. I don't know. Not as an employee, obviously, but in a in an advisory capacity for probably 20 years. And I've gotten to meet a lot of people. And I will tell you. 90% of the people, just like probably 90% of any company really come to work every day and want to do the right thing. They want to perform the way we want them to perform. We're sometimes judged on the 10% that don't more than the 90% that do. But but just recently, speaking to a group of accounting professionals, I think in California, Ken Corbin, who is the commissioner of the Wage and Investment Division and also cares, the title of Chief Taxpayer Experience officer, known Ken. He's a great guy. He talked a little bit about some things that they hope to have happen this year. Now, keep in mind, what we're going to see this year is not based on the funding from the Inflation Reduction Act because that's still kind of in a study mode. Expect a report in the spring about exactly what their plans are with that money. That's kind of the Congress didn't require the report, but they decided to go ahead and do it anyhow and report to Treasury. So this is all in prior stuff. They expect to have by Presidents Day, which I think is what, early February, mid-February, something like that. They expect to have 5000 new people answering the phone that were in the pipeline, if you will, before the Inflation Reduction Act. So they they hope to get that time for waiting down to 10 minutes now saying they're going to have them on line. You have to hope that the training is such that, again, that not only will they answer the phone, but they'll be some help to us when they do answer it.

Roger: [00:18:39] But they hope to have that. You mentioned any the online accounts, they they are really working. If you are a practitioner or a taxpayer and you don't have an online account, get used to having one because there's going to be and it's a good thing where we can go and we can pull the information from our clients, we can do all those things. There's going to be practitioners accounts, there's going to be individual accounts, unfortunately for hopefully for business information. They're saying it's going to be two or three years so that before you can pull business. But online accounts are going to be a big part of what they're doing, where we can go in and see the same thing our taxpayers see. Again, a big part of what they're doing, they've already implemented one kind of seems like a simple change, but it's an important one that amended returns. Now you can designate a direct deposit of a refund, which before. Just like everything else, we had to, to wait for a refund. So so Ken is very optimistic that we're going to see a substantial improvement this filing season. And if we do, that's an encouraging sign because this has nothing to do with the money from the Inflation Reduction Act. This is things that they had planned to do before. And. And, you know, I trust Ken. I know he believes that. Now, whether or not that will actually happen. I guess we'll have to wait and see. But it's encouraging. And I think it will be the first sign of whether real improvement is coming.

Anne: [00:20:17] And Roger, you just mentioned, you know, will will this happen? Will something come about? I mean. We're struggling to get anything through Congress right now with a divided, you know, divided parties. What are your thoughts on that? I know you head out to D.C. quite a bit, as is the tension out there, just so.

Roger: [00:20:36] Well, yes, it may be a good thing that nothing can happen because Congress is Congress is to blame for many of these issues that the IRS, the Congress well-intended passes bills and says to the IRS, go make this work. We're not going to give you any money or any more people, but go make this work. And sometimes they don't care about the calendar. They can do that right before the end of a year and impact the filing season. It starts two weeks later. So we sit now with a divided government. We now have a Republican controlled House and a Democratic controlled Senate and the White House, obviously, for anything to become law. All of those groups have to agree and they can't agree what day of the week it is, much less what tax policy should be. So maybe the their inability to create all these new laws will give the IRS time to actually implement what they need to do internally because they're not going to be pulled off and having to come up with how to administer the employee retention credit, for example. I mean, literally they pass the employee retention credit in December and made it retroactive for in some cases to the January of 2020. Now, that was a well intended. I'm not saying it was a bad idea, but think about what that does to the IRS when they find out in December that something is retroactive till January 1st. And oh, by the way, you can start applying for it theoretically tomorrow. So hopefully the only good thing about a gridlocked Washington is we will have time for the IRS to kind of work while they're fighting with each other and implement some of this $80 billion that they're getting because it's important to get it right.

Anne: [00:22:29] Yeah. Yeah. We saw some legislation right at the end of December. We didn't get our tax extenders. No. Which is a common year end kind of thing. But, you know, we saw are we going to get the advanced child tax credit or enhanced child tax? I mean, it went back and forth. We saw I mean, we saw changes to the 1099 K reporting. We talked about that on our last podcast as well. I mean, there were some things done right at year end that kind of. You know, set up a red flag that we were we were not all in agreement here.

Roger: [00:23:02] No. And that came primarily because that was still in a Congress that Democrats controlled all three. And we got limited amounts through. But the Democrats control the House, the Senate and the White House. And we were able to get a few things through, but not everything they wanted and certainly nothing that the Republicans wanted now that we have a Republican controlled House. You know, we're going to have a hard time getting the budget passed and keeping the government open, much less significant tax policy. So. I guess I'm trying to find a silver lining in a frustrating situation to say that right now, maybe we don't need new laws. We need to do better, a better job of of enforcing and explaining the laws that we currently have and do a better job of answering questions and dealing with notices. I mean, we were getting you know, they suspended notices during COVID and then all of a sudden they started coming out and gosh, we get all kind of complaints about notices and and again. We all know it's I don't know. Let's hope that the next two years, while Congress is fighting among themselves, the IRS and the advocate again.

Anne: [00:24:11] Way to look at it. I mean, you're right. You're right. There's time that can be used by the IRS for improvements. They have some funding. Maybe they can take a deep breath, a breather and make some progress. I certainly don't need any more retroactive legislation. I you know, I would like a very smooth tax season. I would like for this to be the new norm, kind of a few year end things and then a little bit of quiet.

Roger: [00:24:39] And we're going to get a new commissioner.

Anne: [00:24:41] Yeah. Yeah.

Roger: [00:24:43] The commissioner is a five year term now. He is no longer Charles Reddick is no longer sitting there as the IRS commissioner. His term has expired. There has been a nomination. His name is Danny Werfel. And for you college football fans, that is not the formal quarterback of the University of Florida by the same name. This is someone who has served in the IRS before. He is, I'm assuming, in the confirmation process, it is a Senate confirmed position. Once he gets into place, he will put his mark on the IRS. And again, he was an interim commissioner for a while or acting commissioner for a while. So he's got some Irish experience. But that's going to change the dynamics as well. A new commissioner, and they will bring in some of their own people. But a lot of uncertainties. But but he comes in with money to spend, whereas most prior commissioners did not have that luxury. So good.

Anne: [00:25:46] Point.

Roger: [00:25:46] Yeah, let's hope that he will get confirmed quickly. We have a good acting commissioner and Doug O'Donnell, again, a career IRS person. Very, very competent. Very person. But. But you're acting and everybody knows you're acting and you're waiting for the next the next commissioner to come in. So hopefully we'll see some action out of the Senate and we'll have a new commissioner soon and we'll see where their priorities are because they can set certain priorities. That hopefully, and I'm sure that secretary of Treasury is going to be very in fact, the secretary of Treasury came out today and said one of the reasons Janet Yellen she was staying on was to make sure that this IRS reform and money was properly spent. So there's a big focus on it. So the advocate points it out. Now. We'll see where it goes.

Anne: [00:26:33] All right. So let's talk about just a couple of things that tax practitioners or taxpayers can do to sort of help out the IRS. Right. One, obviously is stay current on the law, stay educated, file accurate returns. During this report, it did show that there were you know, there's a significant amount of errors on filings of returns. Some were self filed and some were also by practitioners. So to avoid the processing delays, to make sure that taxpayers, you know, file accurate returns, our tax preparers need to stay up to date for sure. Hopefully we won't. Like I said, we won't have any legislation that's retroactive that we've got to quickly figure out, but that, you know, we'll get guidance from the IRS for tax practitioners.

Roger: [00:27:21] This. Yeah, we have to do our job. I mean, back when e-filing first started, a lot of practitioners fought it. Now. I think we all, for the most part, embrace it. And clearly that's a big thing that we need to do. One of the interesting things that the taxpayer advocate suggested to Congress is that the IRS be given the authority to regulate return preparers.

Anne: [00:27:46] Oh, I know. I saw that coming back.

Roger: [00:27:48] Yeah. Because if you remember, we we had a period there where we had regulation of return preparers and everybody had to go take some CPE and pass a test. And then something called the Loving Case came out and it went to court. And the court ruled that the IRS didn't have the authority to do what they had done. So therefore, all of that work and all of that, you know, listening to practitioner groups and balancing everyone's wants and needs and desires came up with a pretty good system that the courts threw out. Now, the service, rightly so, is hesitant to do that without Congress specifically granting them the authority to do that. So the taxpayer advocate has suggested that Congress give the IRS that, because I think maybe you could comment on this. Most people think that if the person who cuts your hair needs to have a license, the person who prepares that tax return for you probably should have to have one as well. And right now, you don't. You just got you don't have to pay from Peter, I guess, but you've got to have a computer and a sign to hang out that says I do taxes.

Anne: [00:28:58] Yeah. I mean there's a lot there's been some pushback on, you know, overregulating a certain profession or setting standards that, you know, could damage the profession. But I'm all for a standard for all tax preparers to have to meet. I think it's a positive thing for the industry. And I think it's I mean, at the end of the day, taxpayers deserve to have confidence in the person that's preparing their tax return. I mean, I'm for it. We'll see if it can get passed and get through. But I it's hard for me to say to provide the negatives on that one. I'm really only can see the positives on that one.

Roger: [00:29:41] Yeah, particularly. Again, we keep coming back to the same thing. Complicated tax code, a lot of money being handed out and people you know. The damage is done. Whether the mistake is intentional or accidental, the damage is the same. The money goes out, you never get it back or. And so we need to ensure that the people preparing the returns have some level of expertise. And also from a competitive standpoint, all of us have done taxes for any length of time. Have always heard the story of, well, I came to you and I didn't like the result. I could take my same information down the street and get a big refund because they were willing to play that game that the IRS will never catch you. So therefore we can be a little more aggressive on this, a little more aggressive on that. And that puts the people who do it right at a competitive disadvantage. So I think we've got to all kind of be playing the same game and brought under the same tent so that if we are just gaming the system, we can do something about it. Because really, unless you get so bad that they want to throw you in jail, all they can do is say, Well, you can't prepare taxes anymore. And there's really no way. Some states, if you're in Oregon or certain places, you're regulated already. So this is just trying to get everybody into the same tent. So the advocate supports it. I think we support it. I think it's good for the system, but we'll see. That takes congressional action.

Anne: [00:31:07] Yeah. All right. Let me mention a couple of other things that tax payers, tax payers can do. Obviously, e-filing is going to be better than paper filing. So when in doubt, if you can e-file, unless a return gets rejected and it can't be resubmitted and accepted, e-filing is going to be the fastest, safest way. Again, direct deposit, even direct withdrawal, you know, those are going to be the fastest way to process returns. We mentioned the online accounts. Right now, individuals can have online accounts and that it's free. It's really not hard to set up, but it allows you to have access to your account information, account status. We've been saying this for several years now. And you're right, Roger, hackers are getting smarter. Identity theft is not going anywhere. And so we do encourage our clients to get the pin. The security pin for pin. Yeah. Yep. I open. That's that's, you know, again, free. You can request it from the IRS. Once you've been involved in a sort of identity theft, then you automatically get a pin. But even if you have not experienced identity theft, you can request one and there's no harm in doing so.

Anne: [00:32:21] Like I said, it's free. It's easy to do, and it's just another level of security. Something that we I think is pretty interesting. And there was a case and I can't think of the name of it, but your even as a preparer your you have an Ethan tax practitioners have Ethan's and it shows kind of volume when you e-file returns. Right. And there was a practitioner who logged in to his account and maybe he had filed, I don't know, 500 returns, let's just say. But this this the site showed that he had filed like 10,000 returns. Right. And that's how he identified that someone was was filing tax returns using his Ethan. So for tax practitioners now, it's not going to be perfect. Right? Like if you file 204 returns by the end of January and you log in to check your Ethan's status, it should be close, right? It should be close, but it's not going to be the exact number. We're looking for a huge fluctuation. If you see a huge fluctuation in volume of e filed returns in your. Ethan, that is a flag that you've been hacked.

Roger: [00:33:32] Right? No. And you should check it periodically. I mean, again, there's so much money in the tax system now and getting our Ethan number is valuable. Obviously, getting our client's Social Security number is valuable. And these are battles we're fighting every day. And we need to practice as practitioners. We need to maintain good cyber policies. Obviously, insurance. Yes. Think about going to your we're all see these cases where you hear I forgot the most recent one I heard driving in the car this weekend where somebody was hacked, some company was hacked and they got all their information. Think about if that were you and you were the one that had to go to all your clients and explain, my system was hacked and somebody has your Social Security number. The reason we're so valuable now is because the IRS is doing a better job. Like if any. Schwab had been filing a tax return, as I know she has for the last few years. So she made $5 Million and all of a sudden one came in and she had made $20 Million. That would create a flag, right? And the IRS would stop it. So now, if unless that return comes in and it's consistent with prior year returns, they hold the refund. So having access to our records and knowing what those prior year returns look like makes it so much easier for the bad guys to get around the system and file a return that will meet or get through a lot of the checks. So we're targets, so we have to practice good security. We need our clients to do it because like I said, there's big money in the tax system.

Anne: [00:35:05] Absolutely. Couple of other things and then I'll get off my soapbox. One of the things that taxpayers and tax practitioners can do one, Be patient, be optimistic. This is none of these changes are going to occur overnight. It's going to take a while. And honestly, complaining about the IRS is not productive. Complaining about it to your clients is is not going to help the situation. So those are my two little, you know, try to be patient, try to avoid the complaining, be optimistic.

Roger: [00:35:39] And say, well, yeah, we set the tone a lot. You know, when clients come to us and they're frustrated and angry and we may share their frustration and anger, but they kind of look to us to, you know, someone once told me, you know, you fly a lot on a plane, never panic until the flight attendants do. So when people come to us with a perceived problem from the IRS. If we look like we panic and we get angry, what do you expect them to do? Because we're the ones kind of setting the tone, if you will. So we need to to kind of hopefully take everybody, take a deep breath, don't throw gas on the fire, throw water on it. And let's let's try to work through it. And everybody's still going to have to understand it's going to take a while for an agency that was already understaffed and underfunded. That's coming out of COVID. Yes, they're getting all this money and yes, all these things are going to happen. But this is not a short term fix.

Anne: [00:36:38] And you're going to hear it from the taxpayer. I mean, I think just last week in the news, I saw there was chatter about repealing taking away all the 80 billion. And then I think the next day, apparently the IRS was going to be, you know, getting rid of the carbon tax.

Roger: [00:36:54] The tax system and the IRS out tomorrow.

Anne: [00:36:56] Yeah, exactly. And so the thing is, is that the clients hear that, you know, your pops up in your email or you hear it on the radio or you go out to dinner and there's there's talk about it. I mean, there's going to be, let's just say, some far fetched ideas and the clients are going to hear that and and you're going to get questions. You could potentially get questions about that. So, you know, again, remaining calm, setting the tone. You know, clearly the IRS is not going to be completely gone tomorrow. You know, the income tax system is not going to disappear overnight.

Roger: [00:37:35] Yeah. To to to repeal the current tax system, I think I'm correct. Takes a two thirds vote of Congress and then 3/5 of the states or something like that. I mean, think about that. We barely can pass a bill to fund the government, but we we're somehow going to come together to repeal the tax system and replace it with anything from a sales tax to a fair tax to a consumption tax to a flat tax. It's just not practical. But you're going to hear in the next probably 30 to 60 days a bill introduced to do exactly that, because it sounds good and it gets people excited and fired up. But we have the tax system we have and we have the IRS that we have. We have to work within it the best we can. And and I'm going to read something. And he talks about patience. So. Excuse me a minute while I want to read it, because I want to get it right, because I'm going to read this exactly to you. Irs notices in correspondence to taxpayers often fail to explain the problem in a clear and simple manner and fail to inform the taxpayer how to resolve it. Notices often lack essential and basic information needed by taxpayers. Moreover, when a taxpayer calls for assistance, the customer service representative does not always have the background information needed to resolve the taxpayer's inquiry. Even if the taxpayer understands the notice and fully complies, the taxpayer rarely receives confirmation of compliance and is left with a lingering doubt that the IRS has not resolved the problem. In short, the notice process at the IRS is a struggle with a bureaucracy rather than an interaction with a customer friendly organization seeking to resolve taxpayer problems. Now, any I know you know the answer to this.

Anne: [00:39:35] The answer.

Roger: [00:39:37] First of all, did that sound like a good description of where we are today?

Anne: [00:39:42] Very clear. Very, very on point.

Roger: [00:39:45] Okay. When was that actually written?

Anne: [00:39:48] Not this year.

Roger: [00:39:50] This was.

Anne: [00:39:51] Last year?

Roger: [00:39:51] Nope. That was I read that from a vision for a new IRS. June 25th, 1997. That was a problem that existed in the restructuring of the IRS in 1997 that still exist today. Again, that could have been written by someone yesterday and it would have been accurate. It happened to have been written sometime because the book I read it from was dated June 25th, 1997. So it was written sometime.

Anne: [00:40:21] Where did you find this article? In your desk drawer?

Roger: [00:40:24] Well, I actually still have the report because that was my first real interaction in D.C. I was a witness to that restructuring committee, and it was for the reasons we're talking about today, recognizing that the tax system needs a good agency to help us administer it. And there were problems in 1997 that led to some of the things that have happened today. But the problems still, unfortunately, exist in many cases, because while the report was excellent and some things were done, they allowed the system to continue to degrade in terms of hiring and things like that. But I found that quote very, very interesting in that it was written sometime in the 1990s and we're in two p23 and it's still applicable and yet we want the IRS to fix their problems tomorrow.

Anne: [00:41:16] Well, and the advocacy started in 96, right?

Roger: [00:41:20] So this report really kind of made it a separate entity. It used to be called the Ombudsman, and so they used to be the IRS ombudsman or something. And the Advocate was created to be this independent person out there who works for taxpayers, but also on an individual basis, you've got a problem come to us. They can issue something called a taxpayer assistance order. If you have a crisis and your livelihood or your house is about to get ripped, if you get a taxpayer assistance office order from the Advocate's office, it'll stop everything at the IRS. I mean, it's a powerful agency, but they have to they have to have support outside of them. So I found that interesting. As we look at the problems of the IRS, your point about being patient, I guess you can say is our patience about to wear out, given that it's 25 years later?

Anne: [00:42:11] Well, I mean, had I not been had we not seen the funding and the report showing some optimism, I mean, we were going down a dark hole the last three years of, you know, support for the IRS. I mean, tax practitioners just being at wit's, I mean, so many were retiring, they just couldn't deal with the stress and the change and the new legislation. I mean, I I'm I'm feeling much more hopeful this year. I really, really am. And I'm I'm. Going to stay optimistic that they use the money the right way. And we see change. And I know it's going to not going to all be this year, but if we could just see a little bit of change, like you said, would you say 5000 new people on the phone?

Roger: [00:42:52] 5000 new people by present day?

Anne: [00:42:55] I'll take that as a positive sign for improvement. So again, well.

Roger: [00:43:00] We need to see improvement and we need to do our job and hopefully we will see some improvement and then that will hopefully be the kind of indicator of what's coming in the future. Now when they get to. Get their hands on all that money.

Anne: [00:43:16] Yeah, well, tax season is open, so, yeah, returns can be filed.

Roger: [00:43:22] We have, I guess, as kind of wrap up and we'll try to do this on all of our Yeah. Podcast any a couple of things that are just kind of things that have popped up in the last few weeks just to remind people you've got a few things that they need to know about.

Anne: [00:43:36] Yeah. So we were, I read an article and then we've also heard from some of our franchisees. You know, last year we had the child tax, the advanced child tax credit, a lot of incentives, let's say. And so many taxpayers actually saw higher refunds or got more money. At the end of the day, if even if they got some of it early, that kind of thing. But we didn't have all these extenders this year. And so a lot of things are reverting back to thresholds to legislation that was pre-COVID and it's not as taxpayer friendly, let's say. So I do feel as though there are going to be some concern that refunds are going to be lower or maybe you maybe you owe a different amount of tax than you expected. So I just caution taxpayers, but also tax practitioners to be sensitive to that. You know, when you we do a lot we pull those two year comparisons and we sit down with our clients and kind of say, oh, this is what happened last year and this is this year and what's different and what happened and what's the end result. So just be ready for those conversations. Be prepared to kind of. You know, talk to the clients about that. You know, our tax brackets, we still have seven tax brackets. The tax rates have pretty much stayed the same. The thresholds where you jump from bracket to bracket has been adjusted for inflation. Most of the stuff has just been inflation adjustments, but it's the COVID relief that that's expiring and as a result that is going to impact tax returns this year when you compare it to the previous year.

Roger: [00:45:16] All right. And if you are in California, you've already been granted some extended due dates. I believe it's May 18th. Is that correct?

Anne: [00:45:25] I believe May 18th, yep. Natural disasters.

Roger: [00:45:28] Right? Actually, some places in Georgia and Alabama, we had some. I'm in Athens, Georgia, so we had some tornadoes that came through. It's not the whole state of Georgia. It's certain counties in Georgia. There is an IRS disaster page If you need to go there to see if if you're in one of those. So there has already been some extended due dates just for the disaster people. This isn't COVID. We're not extending.

Anne: [00:45:52] Them.

Roger: [00:45:52] Across the board. I think they have already we talked last podcast about some change in mileage rates for for the different types of things that are different. I think we've got some new rates, our new amounts for depreciation on vehicles for this year.

Anne: [00:46:09] Yep. They came out this last week.

Roger: [00:46:11] Yeah. So we'll try to end of these to touch a couple of those kinds of things that come out doesn't impact everybody. But for those it does, it's pretty important.

Anne: [00:46:21] Yeah. And if you're listening to us comment and put something in the comments, if you want to hear us talk about something, you know, like us comment and we'll we'll try to, you know, add it to one of our future podcasts.

Roger: [00:46:33] Right, because we'll try to make this meaningful for you and try to make it current and talk a little bit about the things that, you know, we can should know and can help us get through the next, let's see, three months.

Anne: [00:46:48] Hopefully three months.

Roger: [00:46:49] Three months. The tax seasons don't ever end anymore. They seem to go to October, but I think our next podcast think we're going to try to talk a little bit about the Secure Act, which was once.

Anne: [00:47:01] Yes. That one of the.

Roger: [00:47:02] Few things that actually did happen at the end of the year. So not going to really impact your current filing season, but you may want to have it as a talking point for people.

Anne: [00:47:11] Tax planning for 2023, really 2023.

Roger: [00:47:15] Any last famous words?

Anne: [00:47:17] Any? No. Just kick off tax season. Stay positive. Get some rest.

Roger: [00:47:25] Good luck. Hang in there. You've done it before. You can do it again and.

Anne: [00:47:30] Can't be as bad as last year, right? No. Got to be.

Roger: [00:47:33] Better. Don't say no. I don't think. I think things are back to normal. Let's hope that the IRS is, in fact, going to get better. I'm confident they will. Like I said, they got some good people there who want to do the right things. We'll know soon.

Anne: [00:47:47] Well, that's it. Well, Roger, it's been great, as always.

Roger: [00:47:51] Always fun. Look forward to doing it again in the next couple of weeks.

Anne: [00:47:54] So it sounds good. Thanks for listening. Next one.

Roger: [00:47:58] See you next time. Bye, everybody.

Anne: [00:48:00] Bye.