There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Roger Harris: Hello everyone. It's another federal Tax update podcast. Roger Harris and Annie Schwab are with you again. We're actually in the same room for a change.

Annie Schwab: You're right I'm not in Dallas.

Roger Harris: You're not in Dallas. I'm not in Dallas. So, Annie, where are we?

Annie Schwab: We're in Washington, D.C. Roger, I haven't been here in lots of years, but we're even more than that. We're at the national national fly in. There we go. Roger Harris.

Roger Harris: And [00:00:30] it's really this is my first time being here. But already today, we've heard from Thad Inge, who represents both of us, what's going on here in legislative. We've had Ken Keyes, the director or the deputy, uh, treasurer and a panelist of journalists, and we save the best journalists for now. So we're fortunate to have, uh, our guest with us today and we're just excited about being here. So anyway, why don't you introduce our guest?

Annie Schwab: Yes. From tax notes [00:01:00] federal. We've got Ben. Say your last name. Valdez. Valdez. Ben Valdez here with us today. Ben, please go ahead and introduce yourself.

Ben Valdez: Absolutely. Um, I promise I'm the last journalist today, but, um, I'm excited to be here. This is my first time, uh, at this event. I don't know how. I never made it in the past years, but, um, I'm really happy to be here. Um, I've been covering the federal tax for a few years now, about two years, um, with a big focus on the IRS, um, and how it's been changing, uh, [00:01:30] and how that kind of trickles down and affects, uh, tax practitioners and taxpayers. So thank you.

Roger Harris: Thank you. Thank you for being here, Ben. There was a question asked for the first panel, which I thought was interesting. I'd like your perspective. How does someone in journalism end up in this arena, the tax arena? What what brought you here?

Ben Valdez: Yeah, I mean, it's a fair question. I, I joined tax analysts in 2019. So I had just graduated. It was like my first job. Um, pretty intimidating. But I didn't start out as a [00:02:00] reporter, but I eventually that was what I, I decided to do. And a big part of it is just relying on experts and people that know way more about these issues than I do. So a lot of people like in this room, um, and also, you know, government officials and really just like accepting that you don't always know things. And sometimes you got to rely on other people to help you out.

Roger Harris: Yeah. Because it's such a technical field. I mean, there's times that we look at things and don't understand them. So from a reporter's standpoint, is that difficult? Is that hard to do that you're trying to interpret [00:02:30] tax language?

Ben Valdez: Absolutely. I mean, I try not to do too much interpreting, but, um, it is definitely challenging. I think it helps to always try to find like a human angle in something, if that makes sense. Um, so, you know, whether it's, you know, the people that are trying to decipher this, you know, what do they think about it? And, you know, sometimes the story is just that people are confused about something. And that's, you know.

Annie Schwab: Confusion is a common thing with this new legislation for sure. So I can't imagine you trying to, you know, put [00:03:00] yourself in a tax code head type position to explain it in layman's terms to the public. So thank you for all your hard work and all and for joining us here today. It's definitely been one one kind of tax season, I would say.

Roger Harris: Yeah. What's the what's the big issue right now from from your perspective, what are the things that our audience here listening, what's what's hot with you right now that we can talk about?

Ben Valdez: Um, I mean, you know, we, we kind of touched, they touched on this in the, in the last panel. There's so [00:03:30] much that's been going on. Um, especially just with this new bill for me personally, a lot of it is, um, you know, how is the IRS changed and how is that affecting service? And so how does that affect how people interact with the IRS? And another thing I've been following pretty closely is just the IRS transition away from paper. How is that affecting, you know, just taxpayers for one, and then also the agency itself. And I think it's a really interesting question. Um, especially [00:04:00] when it comes to, uh, the paper checks and the direct, the direct deposit issue. Um, I know that's kind of been a bit of a confusing issue for some, um, these notices that have been going out the, uh, CPE, I think it's five three e so that's something I've been trying to track and just figure out how is that getting rolled out? Are there problems? Um, so a lot of administrative stuff like that.

Roger Harris: Um, Annie leads our tax team. So she deals daily with our offices. We've got about 170 offices around the United States. So I [00:04:30] want Annie to give her perspective of how we think tax season went. And then when we get to the audience, we want to hear how you did, because I think all of us have unique experiences. We all have the same experience depending on what we do. So so Annie, from, from your perspective of going through a filing season, working with all these people, what's your comment on how you think filing season went?

Annie Schwab: So I was shocked. We started on time. I'm not going to lie. If you had to take me to Vegas, I would not have bet that tax season was going to, you know, kick off when it [00:05:00] kicked off. That being said, we knew that the new legislation was going to be difficult not only for taxpayers but also tax practitioners trying to explain this. So we kept trying to tell our office owners, you know, our you're going to have to answer a lot of questions. You're going to have to slow down. You're going to have to talk to them about what it means. Does it apply to them? Why does it apply to them? You know, how what are the things you need from them this year? You're asking for information that they're not usually giving you this year. So [00:05:30] I think that was probably the hardest part for the tax practitioners to feel like, oh my gosh, I'm going to be filing so many more extensions, or I have ten more phone calls this week than I usually do in the past, trying to have time management type of thing, plus keeping up with the new law. I mean, they had to learn what was going on. And let's be honest, we were getting FAQs in February, Um, especially on no tax on tips and no tax on overtime. I felt like just when you think you understood it all, there was some new caveat or some something new [00:06:00] hitting the news that you then had to familiarize yourself with and then talk to the clients.

Annie Schwab: And we talked about social media earlier today. Lots of our firms got things from their clients that were on social media, you know, things like, well, how come my paycheck didn't change? There's no tax on tips now. And, you know, well, this is retroactive. And this year we have to do this. And so there was a lot of confusion. I know in the in the beginning, there was, you know, this thought that no tax on Social Security, like just across the board, [00:06:30] no tax on Social Security. And then I was like, well, not, not right, not quite. There's a benefit there, but it's definitely not no tax. So that I think is probably what was most difficult. And then on the refund side, on the on the tax payer side, yes, refunds did go out quickly. Um, and they were higher as expected, but there were a lot of issues with the no more paper checks despite, you know, asking, getting the information that there was definitely some confusion. And unfortunately, the notices are not that clear [00:07:00] in my in my opinion, the notices are not that clear. I feel like you're telling people who don't have banking information, who are probably not tech savvy, to log on to an online account and go through ID me and enter the information here. So maybe, maybe we should have hoped for, maybe a transition year with that one. That would have been nice. Like give it a year to test it. See how, see how it goes. What am I missing? The other pain points probably.

Roger Harris: Well, I learned one thing with with the list of businesses that were [00:07:30] eligible for the no tax on tips. What a bad human being I am, because there's a lot of people on that list that I never even thought about tipping. Yeah. So I don't know how they. So now I tip everybody. Um, and is this consistent with what you're hearing from from others?

Ben Valdez: Yeah, absolutely. I mean, especially with the the paper checks issue. Um, that notice, I mean, when I first saw it, I thought, you know, am I crazy for not understanding how this works? Because [00:08:00] I mean, I was like, maybe it's just me, but, um, I think especially for the demographics that are going to be receiving this notice, um, a lot of, you know, elderly folk, people who aren't always the most tech savvy. I think that's like one of the big concerns is just, is this even? Can they understand what this means, how it works? And even some tax professionals were confused about it. We had some like directors who were just, you know, telling us how confused they were about going online and trying to find out where to enter the bank account information. So yeah, I mean, I think you [00:08:30] mentioned we should maybe a transition year could have happened. I do think it was interesting. There was a Gao report that came out last year, um, basically saying that the IRS was still waiting for guidance on how to implement this whole directive in December, I think it was, which is pretty close to like when, you know, this was going to start rolling out. Um, so yeah, that's definitely something we're going to look at down the line and see how this keeps going.

Roger Harris: But it's always the unintended consequences that you don't think about. I mean, something that I heard, you know, people who had balanced dues [00:09:00] and didn't see any need to put their bank account information on the return, that then made a mistake in the return, flipped from a balance due to a refund. Well, now there's no bank information, so they're caught up in this whole notice and all this sort of stuff. And again, I think, Annie, you mentioned it, the one criticism I have because again, the IRS didn't ask for this. They were told to do it. And that's true in a lot of instances, they have to do things because they're told to do it wasn't their idea and they didn't have a lot of time. You know, just [00:09:30] the fact that their first message to someone who didn't put a bank account information on there is go to your online account. Well, wait a minute. Probably these people that didn't have a bank account don't have an online account. So where do you really want them to go? So I'm assuming it'll get better. I think if they have a year to work with the software companies, there should be some way to to designate that this is a non banked individual and slow down the back and forth. [00:10:00] It's better for everybody. Let's just go ahead. And is there going to issue them.

Annie Schwab: Eventually you're going to get your money. But the sad part is that you know now instead of getting your money in a two week time frame, you're looking at six weeks or maybe even longer if you don't log in or get it handled or whatnot. So that's really the unfortunate thing. And then that that decreases morale. You know, it's the frustration, um, you know, using calling in to the one 800 numbers. And I'm not going to lie, we've told a lot of people in our office, if you don't get the answer you want, just hang up [00:10:30] and call back and see if you get somebody who knows what they're doing. But I mean, that's kind of where we were with that. Yeah.

Roger Harris: Now you're usually asking the questions.

Ben Valdez: So sometimes. Yeah.

Roger Harris: You got any questions for us right now? Is there anything you want to for us to talk about?

Ben Valdez: I mean, yeah, when you mentioned the phone lines, um, that's one of the things I'm curious about just from, you know, because we've heard a lot about the IRS and how it's changed how many people have left. Um, but I think getting a hold [00:11:00] of the IRS has been an issue for just every cycle of it, no matter. I mean, it seems like it's always been a problem. I'm just curious, like this filing season in particular, you know, for practitioners, whether it's calling the priority line or however you interact with the IRS, like what kind of differences you've noticed in either you or the audience if we want to do that.

Annie Schwab: I will say, um, the callback feature seemed to be working better, at least from what I've heard this season. Um, the wait time where, you know, they actually say, well, your wait time [00:11:30] is 14 minutes. It's pretty close to 14 minutes, which in the past it maybe has not been. I think the biggest struggle on that is they've, they're shifted. So many different groups at the IRS got rid of probably the ones that were more experienced or chose to leave. But what was happening is the knowledge gap. It was the being able to handle the situation, understanding why you were actually calling and being able to solve it. It's like you could it's, it was kind of hit or miss. If you got somebody who [00:12:00] could truly help you or just, you know, read from the screen of whatever the prompt is telling them to, you know, to say to your question. So yes, technology was improved. I think it was lack of training and resources, honestly.

Roger Harris: Yeah, I think one of the things you're going to hear this afternoon with the CEO, and I'm not qualified to challenge it, is what is the right number of employees? What is the right number of dollars? I'm not smart enough to know the answer to either of those. I don't know that you can't work with [00:12:30] 75,000 anymore or better than you can work with 100,000. I don't know how much money the IRS needs, but I think all of us know when it doesn't work and when something isn't working. And so instead of focusing on how many dollars or how many people I think we all need to focus on, is it working the way it should work? And you guys figure out whether that's technology or people, because that's not our call. But this isn't working is what I think the message [00:13:00] needs to be. Yeah, and I agree. Yeah.

Annie Schwab: Anyone out there want to share a tax season?

Roger Harris: Just make sure you get the microphone so our listening audience can actually hear your question.

Audience Member 1: Hi. So I want to bring something to the awareness of a lot of people, uh, that happened, particularly this tax season. Um, as you know, the oh three, uh, requires a lot of, uh, well, the valid Social Security number for a lot of refundable [00:13:30] credits. Well, um, one of the big hurdles that happened this season was that there's millions of people with restricted Social Security cards. What that means is that you have a Social Security card with a legend that says valid for work under DHS authorization only. So in order for you to have a valid Social Security number for child tax Credit EitC, the valid the work permit has to be valid. Well guess what happens? So we, um, we did a podcast right before, um, [00:14:00] the tax season and, uh, to let them know about the awareness of not just having a social security number automatically qualifies you for all these refundable credits. And obviously not having an ITIN. So if you have an Itin for those people that do not qualify for Social security number, uh, will disqualify you for the child tax credit, uh, because you need to have a valid SSN. Well, millions of returns were sent into the IRS.

Audience Member 1: A few weeks later, the IRS issued [00:14:30] millions of notices telling them you forgot to claim the credits. So even with ITIN holders. So we're not even talking about, you know, whether the SSN was valid for child tax credit eligibility or EitC. We're talking about the actual Italian holders when it's clearly stated that they don't qualify anymore. So now go back to your office and get in that situation. Now you have clients telling you, I told you [00:15:00] I qualify for this credit because in TikTok University, they told me that I did, and now I'm going to go to somebody else. And so pretty much what they ask is for you to upload the the 8812 to, to calculate the credit. Um, and a lot of people are doing it. So again, this was very challenging. So if you have anybody that has a restricted SSN, you have to do additional due diligence to verify the work eligibility. Um, at the time of filing, uh, and that that [00:15:30] was a huge hurdle. Millions of people are probably claiming this credit because the IRS told them that they forgot it. So it's a big deal.

Roger Harris: Yeah. Thank you for that. I want to take that and revert back to something that was said earlier. Um, because if you got that letter and you knew obviously you know what you're supposed to do and how to do it, but then you get caught in the middle of what's right and what's wrong. And I think it plays into the discussion about minimum standards and the fact that we need quality people. [00:16:00] And I've said this for years. I think the first time lack of minimum standards really crept into the marketplace was when tax software got so sophisticated that everybody thought if they had tax software, they were an expert. And that's just not true. I tell everybody, you could give me every bit of inventory of a Home Depot, and I can't build a box, much less a house or cut down a tree. So having a tool doesn't make you good at what you [00:16:30] do. But now I'm equally concerned that we're going to couple tax software with AI and people are really going to think they're qualified. So so I think it's it's incumbent that tomorrow when we go to the Hill, that we stress that this is not going to get better.

Roger Harris: It's only going to get worse. And we need to get a handle on it. And I, and I've heard what as I mentioned, Thad and I have gone to the hill speaking the same thing. But when you hear [00:17:00] the the statement, I'm worried about the mom and pop. I'm sorry. Being small doesn't give you an excuse to be bad. So everybody needs to do it. So I think this is just an example of the. As your example indicates, if they had come to the wrong person with that, they just said, okay, we'll give you the credits. Let's go. You know, and that's not what's right. And I think it's the hidden damage of the unenrolled, if that's the right term that we don't see, we see the mistakes, but [00:17:30] think about all the mistakes that no one sees and you can't measure. That's, you know, and particularly with the deficit we have today. So I'll get off my soapbox. Do you have any comment on this?

Ben Valdez: No. I mean, I think you've made a lot of great points.

Annie Schwab: Well, and now with less people out there, less audits, I mean, what's the incentive to do it right. That's also, you know, part of it. How many times did I hear this text? Well, there's nobody working there. Nobody's going to look at my tax return. I can put whatever I want on it. I was like, you can put what you want on your tax [00:18:00] return. I'm not doing that for you.

Audience Member 1: Yeah. So the minimum standard. But the problem is that the IRS we work with the IRS together, right? But then like this time they're working against us because we're telling the clients we're sitting there, people that was was able to claim the credits the prior years. And then we tell them, you don't qualify. And then the IRS says you do qualify. And that's the problem. We have standards, but the problem is that now they're, you know, they're making it twice as hard now because we convinced them and now they get the notice from the IRS and [00:18:30] now we have a second battle.

Annie Schwab: Yeah. Now you look like the bad guy.

Roger Harris: Yeah, yeah. Being. Being right is becoming making the bad guy, Sam.

Audience Member 2: Well, thank you so much for the opportunity. So, um, I speak for a very niche portion of the tax practitioner because I mainly deal with us expats and Americans abroad. So this tax season was particularly challenging because obviously the one big beautiful bill had a lot of international provisions in it. And for all my Americans out there who have businesses in foreign countries, a lot of changes, most of them unfortunately [00:19:00] not as favorable. So we were inundated with questions of how is my CFC going to be treated? How is my foreign corporation? Should I hold it in a US holding company? Should I not? And so obviously, you know, I just wanted to put it out there because we talk a lot about the domestic issues. No tax on tips, no tax on overtime. And I love discussing these things with my colleagues, but I often feel like Americans abroad get forgotten in the middle of the process, you know, and I deal with Americans from Singapore to Paris to Panama City, and they say, well, why isn't why aren't these tax changes working for me? So we've [00:19:30] got mom and pop shops, you for example, in Costa Rica, that have to deal with the same level of tax complexities as Microsoft dealing with their subsidiaries around the world. And so for us as tax practitioners that are dealing with international work, it's becoming very, very challenging to the point where a lot of Americans are saying, well, is it even worth it anymore? Like this is incredibly overwhelming for somebody who's just an individual taxpayer and ultimately a small business owner who just happens to live abroad for personal reasons.

Roger Harris: Yeah, no, I agree. And one thing that I know at Paget, we focus on small business [00:20:00] as our primary customer. And some of those same arguments apply in the US that why are we having to do things that larger companies who have huge resources are trying to do that, you know, and the other thing is every time we get a tax bill, there's there's winners and losers. And we have to recognize that sometimes we're on the losing end. And that's that's hard. And how do you balance winning and losing so that the justification for the [00:20:30] winners isn't too harsh on the losers, but that's always been true. You know, because everything's a trade off. If you're going to get one break, somebody's got to get nailed over here to help pay for it. Well, say they pay for it. I don't think I don't think anything's ever paid for in Washington anymore.

Audience Member 3: So I just want to talk a little bit about the misinformation that that went out this year. And the one thing that really is problematic for my clients, I have a lot of clients that I spent a long time convincing to do a direct debit from their account. And we [00:21:00] all know that it didn't work. And they're calling me up and saying I did something wrong and they didn't. And, you know, the numbers were correct. And they got a letter from the IRS saying they couldn't debit their bank account. And and then they're like, we're afraid to pay this because we're afraid they're also going to come and take the money. And no one's really taking responsibility. And I think that that's really sad. And the other issue is all the misinformation about the no tax on tips, no tax on Social Security, no tax on overtime, No tax or deduction [00:21:30] for car loan interest. People just really heard what they wanted to hear, which is very, very normal. And then we're stuck trying to explain to them why this doesn't apply to you. And, you know, or even the Salt limitation, the 4000. But it maxes out at 500 K. And when you're in the New York metro area, that's not a huge income for people. I mean, it's a huge income, but you know what I mean? It's a lot of people that hear what they want to hear, and then you're stuck kind of holding the bag. And I really wish the IRS would have had more. And I know they [00:22:00] got handed this, but that either the information could have been sent out in a way that people really understood what it meant for them.

Roger Harris: I think one thing you could help Ben with, because he mentioned he wanted to hear about this, people who benefited from these deductions, did they feel it? Did they know it? You know, particularly people who owed and owed less? I mean, he asked us our opinion. So what how did how did they react to. Did they even know they were getting a refund because of one of these things.

Audience Member: That was a surprising factor for me [00:22:30] in most of my clients that that got the senior deduction. They had no idea about it and they got all of a sudden now they're getting either a small refund or they owe half of what they paid the prior year. So again, it's all about the education and the information that we have to, you know, use to inform our clients. The news will tell, you know, you know, this, this and this, but they don't go into detail. So that most of my clients were pleasantly surprised that they got back more money.

Roger Harris: Is that hands [00:23:00] raised or.

Audience Member: I have I have the opposite because the primary work that I do at my firm is with high net worth individuals. So they're hearing about all of these new tax cuts and all of these new deductions, and they're not eligible for any of it because they've exceeded the income limits. So it was a different kind of education that we had to do that. No, you're not going to get more money back. In fact, you may have to be paying a little bit more. So is the other side of the coin for us. And then you [00:23:30] top that with all the TikTok influencers out there who are telling them, if you'll just do this, you'll get this. And we're going, no. Um, it just, it made for a bumpy ride.

Ben Valdez: I mean, yeah, I think it's, I imagine it's challenging just to, to temper expectations when it comes to like, we hear these, I mean, the administration comes out and says we're going to get the biggest refunds of your lives, you know. Uh, and, you know, we've been kind of touching on this, but I'm just kind of curious how, [00:24:00] how you kind of set expectations when you hear stuff like that. Like.

Annie Schwab: So it's hard. Um, and it's also very time consuming. So a lot of the information came out when tax practitioners were so like the biggest, busiest time of the, of the year. And yet they're putting stuff down and try to learn new stuff and answer questions and what they thought was happening today, two weeks down the road is something different. So I don't know the fix to how to educate the [00:24:30] taxpayers, because if you're not in this realm, it's not on the forefront, right? Like it's whatever you heard on dinner, whatever you heard on the radio or whatever, you know, your friend down the street told you over a beer. All of all of those things come into play. But there's gotta we have to help the IRS get that information out. How? I don't know, podcasts like this, other ways of communication. Because the IRS was dealt X had this much time and this much money, [00:25:00] you know, to get it out fast enough. Um, and so they were put in, they were put in a tough spot, but there's got to be something that we can do to help with that. You know, yes, you're a trusted advisor. Your clients, they trust you. But if they're not talking to someone like you or you, they're lost. They're on TikTok. They're trying to figure it out on their own. Try to get most money they can. And guess what? They don't think they're going to get audited, so who knows what they're doing. It's just, you know, it's this circular pain. [00:25:30]

Roger Harris: So I think something you're going to hear this afternoon when the CEO comes in, we'll get your questions a minute. Because I heard him say this. He views us as, uh, their distribution network, distributing information, distributing, which I thought was an interesting way to phrase it that. But I think you'll hear him say that as he speaks to people in our community, that we become the distribution network for, for these types of things. And we have to be the one. Unfortunately, sometimes [00:26:00] telling them it's not quite as good as well.

Annie Schwab: It's never getting simpler. It's no, I mean, we can say, oh, this is so easy, this is so easy, but it's very complicated. And there's always the but what if or well, kind of, but I did a little different this way or this or that, or a little black and white or, you know, I don't know.

Audience Member: I just want to make the comment. You know, it didn't help that Social Security sent out a letter to all Social Security recipients and saying [00:26:30] that their Social Security was no longer taxable. And that right there started a whole nother storm. Um, so with our taxpayers, before we could even get the communication out to them. So I mean, it's not just IRS, it's the whole system. What's coming from the white House, what's coming from Congress, what's coming from other agencies also.

Roger Harris: Exactly. Yeah.

Audience Member: I [00:27:00] work with the Volunteer Income Tax Assistance program that's been around since the 70s. Feels like I've been part of it since the 70s. But, um, anyway, we had a huge problem with our taxpayers coming in who did not have the bank account. And we had to. And we were told the cover story was to tell them that it would be a six month wait for their refund check, and [00:27:30] they simply didn't care. And that's hard to believe because mainly people are filing through Vita. If they have a refund, you know they need their refund. So, um, I just, I just see this as a problem. And when we were talking about how to advertise, how to get the word out, there's got to be a way to get out, put it as a stuffer and a utility bill, put it as announcements at Walmart. I mean, we've got to have some better way of commuting, [00:28:00] communicating to the masses. What what do you guys think about that?

Ben Valdez: Yeah, I mean, that's a great it's a great point. I think, um, I spoke to a former Treasury official who she brought up the idea of like interagency, like, you know, Social Security could send something out about it, you know, like you're not going to get, like if you don't give your direct deposit info. And I thought that was interesting. And also she also works at Jovita and was saying, you know, I wish we had fliers or something, you know, because, you know, something like that could go a long way. Just, [00:28:30] um, but I think it's also just the issue with the notice itself. I think, um, people are sometimes wary of like mail from the IRS also. And so I don't know, it's a tough position to be in for, for everybody. But um.

Roger Harris: Yeah, I mean, different ways of communicating. I mean, we live in a completely different world than I grew up in, um, which was a long time ago, but things have changed a lot. But I do think we have to find ways to combat misinformation where it's coming from, which is going to be more [00:29:00] in the TikTok world, more in the social media world. Unconventional ways of getting messages out to taxpayers for when you should be able to identify the group that's going to be impacted by it, and find some common place that all of them turn to or go to and communicate through that because it makes everybody's life better. I mean, their life would be better. Your life would be better. The r s life would be better if these things worked better. And sometimes I don't think we work as a group, we work independently and we don't think. And hopefully [00:29:30] one of these days we can get something where we're. I know NAEA. I know us have always said, please come to this community early and let us kind of put you through a real world test of this. And, and let's be creative. Let's find different, better ways to do things because just the way, because you did it this way for the last ten years doesn't mean it's the right way to do it. So that's a great point. Phyllis in the back.

Audience Member: Yeah. So you just segued into [00:30:00] what I was going to say, going back to what you said, Roger, about the new IRS CEO thinking of us as a distribution network, which is great and fine, but I think that networking has to flow in the other direction too. Because, I mean, thinking back at the problem that Rubin described, if people had asked us beforehand, you know, we're programing our systems, blah, blah, blah, blah, blah, what [00:30:30] do we have to look out for? You know, I think a little advance consultation would head off a lot of these problems. So I'm wondering, what do you see? I mean, I'll ask this to all three of you about the IRS willingness and ability to actually take advantage of the collective wisdom of the tax professional community.

Annie Schwab: Ability [00:31:00] and willingness might be two different things. I do think that they would welcome any help that would get their message out. Do they have the ability and the resources to invest people and time into making sure that the message is not only accurate, but is sent out in an appropriate way where they can go, locate or contact or dig deeper. And I think the modernization [00:31:30] is better, but it's just not there. Um, I think it's going to take some time.

Ben Valdez: Yeah. I think it's also going to sort of be important to make sure that we have like adequate, you know, watchdogs like Tigta and Gao and the taxpayer advocate also. I know the taxpayer advocate has just been a really helpful resource for just like kind of explaining things that the IRS is doing in a way that's like more detailed. And I think that can go a long way too. And just in terms of like, [00:32:00] you know, getting the messages clear and out there.

Roger Harris: I think it's hit and miss. Um, also I would would take that not just to the IRS, but I wish Congress would come to us every once in a while and say, wait a minute. What are you doing here? Think about what you're getting ready to do and you're going to make it. You're going to make overtime retroactive. Are you kidding me? You know, so I think they should talk to us as well as the IRS. Um, I've gotten to know Commissioner Werfel [00:32:30] pretty closely. Uh, his daughter actually goes to school. I'm from Athens, Georgia, with the University of Georgia, so I got to know him. I thought he was one of the best listeners and really sought out our information better than, than most. Um, see where that got him. Uh, but, uh, so I think it's possible, but I think it has to go through the entire agency. I think right now you'll see it in some places, but you won't see it in some other place. And I think that's unfortunate because those two places [00:33:00] could interact and we get lost. But I think it's a it's something we should all strive for. And, uh, we should praise it when it happens and encourage it when it doesn't.

Annie Schwab: I'm sure everything looked super easy on paper when it was written into law.

Roger Harris: Oh yeah.

Annie Schwab: 917 pages of OB three. I'm sure everything was crystal clear, but it's the implementation of in the real world that gets us.

Terry Lemons: Hi. Terry Lemons, former IRS communications, [00:33:30] now with Frost Law.

Roger Harris: Uh, I'm just answering the questions I'm not asking.

Terry Lemons: Oh, I this this is a fun moment to ask questions. Just just kind of. This is a great dialog. And I had a couple thoughts I wanted to add and just kind of building on Phyllis's comment. Um, I saw the IRS go through a number of different periods. And it is an agency that generally follows the lead of the person in charge. And I always felt like from a communications and a relationship standpoint, [00:34:00] the agency worked best when there was a two way dialog going on. I mean, obviously the agency wants the tax community to carry these messages out. When you have a big major tax law change like OB three. But I always felt like when we were able to get buy in from the very top of the agency and have that two way dialog, it worked better. And we had a number of instances, several of the leaders who really pushed the senior [00:34:30] team to get out there and engage. And I think that's part of the answer. And, you know, and to Roger's point, yes, having interaction with Congress is important.

Terry Lemons: And that's what I love about the Na fly in that you guys are here on the ground talking to your members, and it's really important that you talk to them. And I think the tax pro community doesn't flex that muscle enough. You have more influence with those legislators than you might realize, especially, you know, when you're showing that you've got [00:35:00] members out in the district. But I think ultimately right now in this environment, it's a very difficult environment to communicate in. And going back to the comment about the Vita and, you know, and the letters going out. There is no silver bullet on communications right now. We certainly tried while I was at the IRS, tried figuring it out. But the reality of it is people are getting information from a lot of different ways. And you've got to do like basically all the above, you need to have messages in Walmart, [00:35:30] you need to have social media. You also need a lot of support out in the tax pro community, but the IRS needs to work cooperatively with the community.

Roger Harris: Thanks, Terry. Okay. One more.

Audience Member: Um, I've had an interesting year this year. It was kind of funny. I just got a letter in response to a 1041 that I filed back in 2020 telling me for the 16th time that they need another 60 days to process the return. So I see, okay, they're trying to keep up with us. [00:36:00] At least they're letting me know that they have it buried someplace on the other side of that. On April 13th, I filed three payments online manually because the client owed over $25,000. They were kind of high end clients, which was nice. So I make the payments. We file the returns electronically. Before I came to this conference, I got letters from IRS that said their payments haven't been made and that they owe X number of dollars in penalties and interest. So they got the tax return, but somehow they didn't get the payments, which I thought, here's probably where AI jumped in, got [00:36:30] the return, but haven't processed the payments on the other side of the fence. So it was just kind of interesting to get Ahold of the bankers to make sure that the payments were made so the clients don't freak because they're all freaking out because the penalties are 5%. On top of that, it was a little bit nasty on those high end payments. So it was just kind of interesting to understand that or to get those letters as quick as I did before April 31st, when the tax returns weren't even filed until April 13th. So it was just unusual. Yeah. [00:37:00]

Roger Harris: Anybody else want the mike?

Audience Member: Thank you. I had a comment, basically when you were talking about the different challenges that as tax preparers, enrolled agents, we may have faced. One of the challenges that I found this tax season was I did love the callback feature. They were very responsive. We were not on hold as long, but they didn't know anything. And every time, every [00:37:30] I, I promise every phone call I had to direct the person on the phone or show them where to find the information or to tell them, no, you can do this or no, I can do that. So I definitely felt like the training there was a lack of completely. And I'm assuming that that is because of the lack of workers. But that was the biggest challenge that just calling them that was an epic fail.

Annie Schwab: Yeah, [00:38:00] I think, Roger, maybe you spoke with Werfel at one point, but it's like three years of training before they're considered senior or qualified to do X, Y, and Z. And a lot of the people on the phone just got pulled from another department. So the body count might be there. But the knowledge of the seniors, most of them have have left. And so they're filling the chair, right? I mean, they're doing the best they can, but they're not getting they don't have the training, um, [00:38:30] or the knowledge, honestly.

Roger Harris: Yeah. Let's hope that this is kind of the beginning of a learning curve and it's going to get better, not worse. I mean, I think. Well we'll we'll see. I mean that's we'll, we'll see. I mean we've I mean how many learning curves do we go through in our lifetime? But I think at some point there is a lot of new people put in new positions. And just think about it from your perspective, how quickly did we figure all this stuff out? If you'd have put me on the phone my first year, God help [00:39:00] you because I don't know what I would have told you. Um, so let's hope that it's going to get better as these people, hopefully they can stay and continue to, to get better at it. But if not, this is where I think we have to do our job. And again, I don't know how many people you need, don't know how many dollars you need, but I need somebody when they answer the phone. First of all, it'd be nice if you'd answer the phone, but then when you do know what you're talking about, when you answer and that's where we can speak up, you figure out how to solve it. I'm [00:39:30] not telling you how to fix it. I'm just telling you what's broken.

Audience Member: So that brings up another issue. You know, as a practitioner, we are still, for the most part, calling the practitioner hotline. So we are using the phone. We are using those scarce IRS resources with better or worse results. But the thing is, this is a perfect Need [00:40:00] for unlimited digital communication that we as practitioners can initiate to the service. That way, if the person who picks up the message isn't the one with the expertise, they can route it to someone who does have that expertise. And instead of having God knows how many hours on the phone getting transferred from one place to another, you know, you would [00:40:30] have, I would think, a better mechanism for smoother communication and better utilization of resources for the service, as well as better service to taxpayers and the tax professionals who represent them.

Ben Valdez: Yeah, I believe the IRS has been working on some sort of new, like internal kind of platform for all of its like customer service reps, but it's been kind of a long project. So I think, [00:41:00] and with a new administration also kind of put all these new modernization things on hold. Um, and I think we're going to learn more about that this summer when they release hopefully, um, kind of like a roadmap. So.

Audience Member: Well, and as an addendum to all of that conversation, one of the big things is that the IRS is using the statistics of, hey, we answered the phone 97% of the time within five minutes to tell Congress that whatever they're doing is doing a good job. So that's a whole nother [00:41:30] one of those issues is so they're answering it, but we're not actually getting the problems solved that people were calling to, to deal with 100%.

Ben Valdez: Yeah. It's important to note that they're, they are actually going to be adopting a new metric for, for that. Um, oh.

Annie Schwab: No, that's great. I hadn't heard that. That's awesome.

Ben Valdez: Yeah. They, I think the CEO might have mentioned this at some point, but, um, so this is going to be the baseline and they're going to phase out that level of service, and there's still a ton of questions about how they're [00:42:00] going to calculate this new metric, what it's going to include. It's kind of interesting. I mean, yeah, we don't know if it's going to be more comprehensive, but they're calling it like an enterprise service metric. Um, and it's supposed to include, you know, voice bots now. And so we're gonna have to see how that how that works.

Audience Member: But we haven't talked about this, but there was a very large number of verification letters that have gone out. There were three different ones, and I had a majority of mine go [00:42:30] to 80 and 90 year old clients who, um, so I spent a lot of time talking them off the wall and, you know, letting them know that they definitely needed to do that. But there was no instructions as to, they all had payments that were supposed to come out and their processing was delayed because of this. And some of them took three weeks to get to them and IRS. We've heard nothing from [00:43:00] them as to how this is really going to affect the, you know, their individual processing of their returns. But I have a real hard time. Why would they want to verify somebody who for 20 years has had the same sources of income, the same, um, types. Nothing's really changed.

Annie Schwab: So I will say there's been enhancements for verifying your identity because of identity theft. And a lot of [00:43:30] it had to do with the Trump accounts because they were matching Social Security cards, the exact name on the. So if you had a middle initial with a period or middle initial without a period, it had to be the systems were matching it perfectly to your Social Security card, which was an enhancement. So if some of these older. And it wasn't, it was happening to a lot of the kids when they were setting up the accounts. I don't know about you guys. We had more schema errors on our e-filing [00:44:00] this season than I've ever seen before, and most of it was a mismatch to a name. It could have been an entity return that had a comma before LLC had a period after LLC. I mean, it was very, very, very technical and they were matching directly to what they had on file. So it was meant to be something as a way to prevent fraud and identity theft and, you know, grabbing dependents that aren't yours and all these other things. On the flip side, we had a ton [00:44:30] of notices, rejections, and schema errors. I don't know what the fix is. I don't know how you update the system. I don't know if there's a way, you know, if this is a baseline, but we experienced that and that was the explanation that I received, so I'll pass it along.

Speaker 16: Hello. I have a question. Um, the, um, I love the, the new upload tool for the 2848. However, around the the. Around the 15th it stopped working for me. Um, [00:45:00] and, and it basically, um, didn't work for, you know, for about a week or so. Is there any, you know, anything? And then all of a sudden it's like a switch came back and, and now I was able to, to upload.

Annie Schwab: Yeah. I was not aware that we didn't have um, that wasn't, didn't come through our support line or anything like that, but I'm shocked that they didn't have something on the IRS website to indicate like a, a, I [00:45:30] guess I should not be shocked. You're laughing at me. I'm not shocked that that there was not something on, on the web page. Um, just providing an indication. I mean, just letting let, just let us know that, you know, there's a problem and I'll stop freaking out. Right. I know, you know, you're going to fix it. Let it be. Um, yeah.

Audience Member: Um, this question is regarding the advisory committees and, um, what we have talked about as far as IRS, Congress [00:46:00] listening to us as practitioners, and we do have the opportunity to participate in those. I'm sure there's been there's probably several people in here that are have been part of them. I know you have, um, I have, but, um, it seems to me like at least this year there's been a slog, a backlog, whatever the word for it is a delay in getting people vetted. And have you heard if that is going to result in maybe getting rid of some of the advisory committees? I just [00:46:30] got a notification that Air SAC is looking for a few good men and women. So hopefully if you guys are inclined to do that, you should. But um, anyway, what are your ideas?

Roger Harris: Well, I'm very pro those committees I got the privilege of serving on air sac. I came in at a time where I actually served four years instead of three because we were transitioning. And I got to I got to chair at my last two years. And I can tell you it changed me as a practitioner. That experience changed me. My [00:47:00] first year, I thought, why am I here? Who picked me for this? You know, I, I'm thinking, if you can't do better than me, why our country is in a big problem. But as time got there and you got to meet people and understand I got an appreciation for for all the criticism we give to the IRS, I would say I can put on one hand the people that I didn't think were trying to do their job as best they could. Um, sometimes they're hamstrung by their technology [00:47:30] or whatever they can do, but I found the people to be really dedicated to what they're doing. And I know it made me a better person. So I agree strongly. I have not heard I did see that SAC is taking, uh, applications for new members trying to get Annie to apply over here, but she, she, She's got two young kids, I get it. So, um, but I do think that's a place that we can really look to in this organization should be very proactive in putting people up for these committees because [00:48:00] it's going to take that kind of, I think, effort from the inside to really help anything we can do to, to make it better.

Speaker 16: I had a client who was, uh, a partnership I've been following the partnership returns for about ten years now. Uh, this year I went to file an extension and it rejected because it said that the client, well, basically told me it was not a partnership. Nothing [00:48:30] changed, but just not you're not sure. And then when talking to my other counterparts on social media, they basically said, oh, yeah, well, I had that happen to us. We had to mail it in.

Annie Schwab: So we have had a couple of those. Um, from the one 800 number that I called. Um, I did speak with someone who said that if there was a member or partner change, now that could be [00:49:00] social security, birth date, name something. If something had changed with the owners on file, the partners on file, that it was automatically kicking them out. There was a number you were supposed to call to verify the the entity, right? So we probably answered that question 25 times. We just copied and pasted the same answer. This is what the IRS told us. You have to call this number and verify you verify it over the phone. [00:49:30] You will be able to submit the return. I don't know why. Um, that was the only solution. In fact, for the longest we I thought it was a tax software. I'm like, what is wrong with the software? Why is it like, you know, I was getting very frustrated. And then when you when you support multiple offices and you start getting the same thing. I'm like, it's not this person. It's not a user error. Something's up. And so that's, that's what I was told. Now, I don't know why it was just partnerships because it was only the 1065. We didn't get any of the the same errors with, you know, [00:50:00] the corporations or S Corp. So I feel your pain, but I don't know exactly what was going on there.

Roger Harris: All right. Our main job is to get out of here on time so we don't hold up the next panel. So Annie, then Ben final words and then I'll.

Annie Schwab: Oh, I'm just so excited to be here. This is so much fun. And the weather's perfect, so I feel like I was meant to be here today. I'm like, this is great. I haven't been to DC in so long, but I do really appreciate you guys, um, participating in the podcast and, um, it should probably air either next [00:50:30] Monday or the following Monday. So if you're not listening to federal tax updates podcast, you can catch Roger and I talking about something we haven't mentioned IRC today. So I'm just going to say it so that we can say we did it. Um, I mean.

Roger Harris: Ben any final comments.

Ben Valdez: Um, no, I mean, just thank you guys so much for having me. Um, it was really great to hear everybody's perspectives. Um, I think that's just really important. So thank you.

Roger Harris: Well, thank you for doing this. Thank you. Agreeing to sit up here with two people. You have no idea who we are and what we're [00:51:00] going to talk about because neither do we. So we thank you. We thank you for doing that. And and again, thanks to NEA for letting us do this. This is fun for us. This is a lot more than just Annie and I staring at computer screens and talking to each other. This has been great for us. We appreciate your feedback. We hope you'll listen to us again, and we hope you'll invite us back back into it again. And for those of you that are listening, thank you for listening. We hope you enjoyed this. Put the fly in on your calendar for next year. Thanks for listening. See you again next [00:51:30] week.