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

Roger Harris: Well hello again everybody. It's another federal Tax update podcast with Annie Schwab and Roger Harris. Annie, good to see you again. How are you?

Annie Schwab: I'm doing well. Roger. Good to be here.

Roger Harris: Yeah. Wish wish we were in person again. But we're back on the the electronic world here and yep, doing it through computers. But we have a repeat guest today, [00:00:30] uh, someone that was with us a few months ago, and we saw something interesting that he was commenting on, and we thought it would be a good time to have him back. And we are happy to welcome back someone that there are a lot of, you know, but, uh, if not, we'll ask him to introduce himself. But we have Bob Kerr back with us.

Bob Kerr: Thank you.

Roger Harris: Bob, tell everybody again, a few people out there who probably haven't heard of Bob Kerr or come in contact with Bob Kerr. Tell us a little bit about your background and [00:01:00] what you're up to now. And then we'll talk about why you're here with us again today, which we're happy to have you back.

Bob Kerr: Wonderful. It's good to be back. And thank you for thank you for the flattering pre introduction that and the assumption that everyone knows who Bob Kerr is. That's flattering. I am Bob Kerr. I'm an enrolled agent. I am currently running my own consulting firm called Kerr Consulting here in Washington DC. My standard line is I'm from Washington and I'm here to help. The business [00:01:30] I'm running right now is a combination of government relations, comms consulting, plus a little bit of education. Before this, I was head of office for the National Association of Enrolled Agents. Before that, I ran, uh, government affairs for NEA for about a dozen years. I also spent time I spent about a dozen years at IRS in various functions, including technology research, weirdly [00:02:00] in their AI labs. Roger, I don't know if I ever told you I was in the the AI.

Roger Harris: I didn't know that. I didn't know.

Bob Kerr: Irs many years ago. And I also worked on the Hill. I worked for Senator Grassley on the Finance Committee. So I have my distinction, I think, is that I've sat at a lot of the different tables for a lot of different seats at the same table when it comes to tax policy and tax administration. And I'm happy to be here.

Roger Harris: You have done a lot. You've seen it. You've seen our industry from a lot of different angles.

Bob Kerr: It's pretty [00:02:30] from all the sides. Roger.

Roger Harris: Yeah, of course it is.

Annie Schwab: Well, thank you so much for joining us. Um, the, the reason we have you here today is because of an article that you wrote in tax notes. Um, the title was the high costs of the IRS centralized Authorization file system. Very interesting article and I appreciate you sharing it with us. Um, would you mind telling us a little bit about that article and maybe some of the key points in it.

Bob Kerr: Absolutely. Thanks for asking. Um, I've been [00:03:00] interested in this issue for years, probably since 2012 when when IRS one morning decided it would wake up and shut down the, the, the day the disclosure authorization. Roger. Roger will remember that well. Um, I wrote though the tax notes article on the heat because I've, because I've always been interested or been interested for a long time and also because of, of two articles or two reports that came out [00:03:30] at the beginning of 2026. The first one is the National Taxpayer Advocate's annual report to Congress. Um, and the second is the Internal Revenue Service Advisory Council. And that's air SAC, which also creates an annual report. Both of those publications, I think are always worth read the annual report to Congress or the Ark, because everything in tax has an acronym. It always includes at least ten most [00:04:00] serious problems. Or of course, they're not most serious problems. They are what they are MSPs. So the The Ark contains ten MSPs. This year. Debuting for the first time was the centralized authorization file or the CAF. So everyone gets a gets a front end on, uh, an overview on all the acronyms, uh, the report. And Roger, if I remember correctly, you, you were on and perhaps [00:04:30] chaired that committee a number of years ago.

Roger Harris: Yes, it was, it's a while back, but I did it was a, it was a great four years of my life. I served four years and chaired it for two and learned a lot of things. And, um, I'm not sure I'd go back and do it again, but it was a great experience.

Bob Kerr: It might have been one of those experiences where you said, no problem when you meant to say, no way. But anyways. No, no. In seriousness, it is. Those are. The IRS brings in volunteers from [00:05:00] from all over tax administration, from industry as tax professionals and and other interested parties. And they look at IRS functions and make recommendations. So both the Anna reports of Congress and the report concurrently focused on on calf, which I thought was, uh, was interesting and noteworthy. What I like about these reports, and regardless of the topics that they cover, is that they invariably provide data that's unavailable [00:05:30] anywhere else, whether, um, on filing volumes or business processes or things are just going to be difficult to determine from the IRS or from any of the other public sources of information from IRS. So for, for those of us out here who are kind of hungry for figuring out what's going on at IRS. It's it's our one sort of annual chance to get a to get solid information out of an agency that and I don't think it's unfair to say [00:06:00] this that is generally reluctant to provide such.

Roger Harris: Right. It's from the outside. It's from the taxpayer advocate is independent. So it's really outsiders looking in to the IRS and, and commenting.

Bob Kerr: Oh, absolutely. Both these reports are outsiders or outsiders looking in. And and again the reports themselves I think are excellent. They, uh, are wide ranging. I, I pulled this piece again because I'm just interested in the topic. I think it's something that doesn't get nearly [00:06:30] enough attention, but walking away from this, you know, folks who are out there listening, I, I would hope that you'd be curious enough just to go and Google them and, or I don't know, Roger, if you guys post, if you have an appendix or you can post links. If so, we can post them here on on how to get to to those reports.

Roger Harris: All right. Okay.

Annie Schwab: So can, can you for our listeners here, can you tell us a little bit more about what CAF is? I mean, [00:07:00] I know I said it centralized authorization file system, but what, what, what does that actually mean?

Bob Kerr: Yeah, I think that's a incredibly fair question. And one of my intense frustrations after decades in this business is when someone defines CAF by saying, oh, that's a centralized authorization file, as if that's going to help me because it doesn't. Yeah.

Roger Harris: Like that tells you anything else? Oh, yeah.

Bob Kerr: I told you what it meant. No. And in this case, the caf is. [00:07:30] Well, I think we have to we have to back up a little bit. We have to talk about what is the function of the caf. And the function of the calf is to process two different forms. Um there they are. Authorization forms. We call them authorization forms broadly, but they come in two flavors. One is a power of attorney or a 2848, and the other is a tax information authorization or Tia or an 8821. So I call them Tia and Po, [00:08:00] or a. 2848 and an 8821. Irs processes those two forms. And your listeners who are well aware of these will indulge me the further explanation, because I want to make sure that everyone's coming along for the ride here. The, um, the 88, 21 or the Tia allows a taxpayer to provide access to his transcript, his or her transcript information to anyone. I mean, I could walk out my front door here in the middle of Georgetown and start [00:08:30] handing them out like candy to any any passers by the, uh, the power of attorney or po or, or 28, 48 is a much different beast. It is a tool that is used by practitioners and practitioners as a term of art for enrolled agents, CPAs and tax attorneys. They have. All three of them are enrolled to practice for the agency and have the right to represent taxpayers in order [00:09:00] to stand in the shoes of or represent a taxpayer, you have to hold the power of attorney.

Roger Harris: Gives you the ability to negotiate or settle on behalf of the taxpayer, because you literally become the taxpayer.

Bob Kerr: Exactly, exactly. It's it's typically used. Well, I see three spaces. I mean, maybe you see something else, but I think this covers the waterfront in exam sort of audits and collection or non-filing and in appeals, which is where you go if you don't like the results of either of the first two in [00:09:30] all of those cases, in order to represent the taxpayer, in order to act on behalf of the taxpayer, you have to have the power of attorney on file has to be posted, and we're the place where it's posted. Any is to the calf. Does that take us where we need to be?

Annie Schwab: Yeah, I think so. I think that was a fairly decent explanation. And I think it's an important distinction. And I think that sometimes, you know, people forget what that distinction is and why the Po is so [00:10:00] is so important for tax practitioners. Um, so I guess my next question here would be, why is the name of your article is, you know, the high costs of running this, this system, this file system. So why is it so costly? It seems fairly easy on you know, it seems so easy, right? You fill out a form, you put it there. And this system holds all of this documentation. But what makes it so [00:10:30] costly? What's the problem?

Bob Kerr: Yes it does. At the surface it seems pretty simple. And the forms themselves are not particularly complex. Um, but let me put a pin on that for just a minute, because there was one more thought that I wanted to get out there before we left the distinction between A and A and a Tia. What I have found over the years is that, um and particularly and maybe this is enrolled agents, and I don't mean this unkindly, I, IIIRIR1I [00:11:00] identify.

Roger Harris: Ur1ir1i.

Bob Kerr: And I identify tremendously with with the profession. But I think we get excited because because we are practitioners, we can we can have powers of attorney and we want everything to be on a. 2848 right away. The the problem with that is that. And this is particularly with new clients, you know, potential client walks in your front door and says, oh, I got problems. And you slide a power of attorney in front of them [00:11:30] and you find out from IRS, they got all kinds of problems that you don't actually want to know about. You know, they've got criminal type of problems. And then you and this will take us down a much longer road that doesn't. That would be off topic here. Perhaps another day, Roger. But that's a position you don't want to be in the. Often the better way to do this with a new client is to just get the 8821. You pull the information, you see what's going on. The, the, the key distinction between an 8821 and a 2848 [00:12:00] functionally, is that an 88? A 2848 requires you to act on behalf of the taxpayer. The 2848 is just handing out information. Does that. Roger, is that a fair distinction, do you think?

Roger Harris: Yeah. I think if all you need is a transcript or information you could use either. But you don't need the right to represent. And sometimes, as you said, we just use that form because that's the first one we ever knew about or thought about. But it's more complicated [00:12:30] than that. If you get that right and you don't need it or don't want to have it, you've got to go through a formal process of removing it. And that can be problematic. So again, if you're just looking for transcript data to find out how many their estimated tax payments are made or something like that, you don't need to go through the issues of getting there, the right to negotiate because there's nothing to negotiate. You're probably just preparing a tax return, but that doesn't expire. You're still there. You still have that, right. If you did it when all you really [00:13:00] wanted was a transcript. So I think a lot of times we just take the form that we're most familiar with or we've heard of first, and we think a power of attorney is the only way to get it done. But that authorization form in many instances is all we need and all we should do. So I think that's the important distinction to me.

Bob Kerr: The the, the 2848 sort of indicates that we're that you are my client. And the 8821 says that I'm thinking about you being my client. Right? So I [00:13:30] think there's some, there's some amount of space in which I, I always caution folks that It not. Not everyone's a good fit for you as a client. And so maybe, you know, take the two step there. And so I perhaps I've overly belabored that point. Um, the, one of the questions I think that Annie was getting at or I will answer this one before I answer the question she did ask is that, you know, why did why all of a sudden did did both air SAC and the taxpayer advocate focus [00:14:00] on this issue? And I think it's this I think that the report noted that the Internal Revenue Manual or the IRM calls for a five day processing time for authorization forms. But between I think it was like November of 24 and April of 25, the IRS averaged something on the order of 24 or 25 days to process these forms. So that is that's a stunning overreach. And also, of course, significantly [00:14:30] problematic when clients are coming to you with 30 day letters. And then the advocate noted that the that the outdated calf posting system. It's overwhelmed and it causes. It causes taxpayers missed deadlines. They they receive incorrect notices because because of it. Um, and they then they experience unnecessary enforcement actions as well. Um, so, but to, to, to Annie's point, this, [00:15:00] the system is, is decades old, right? It's the IRS didn't just start processing 88, 21 and 28482 years ago. And so if, if I had to summarize in a sentence what, what the problem is here, I'd say it's that, that the demand for these authorizations has skyrocketed. And the, the, and I think we perhaps buried the lead here. And Annie, this goes it's sort of implied in your question. This is a pretty easy thing, right? If you send them over IRS processes [00:15:30] and posts.

Annie Schwab: But seems. So. It seems like. Yeah.

Roger Harris: How hard can it be?

Bob Kerr: Well, how hard can it be? There's. There's nothing easier in this life than, than than underestimating the difficulty of another man's job.

Roger Harris: Um.

Bob Kerr: In this case, the difficulty is that that IRS hand processes almost all of these. And so this is the year of Grace 2026. And IRS is receiving these by fax by [00:16:00] or I mean, they're not animals. They're receiving them by fax. So I assume that it's not falling to the floor in those. Well, Anna, you're probably too young, but. Roger in those curly little fax papers. Right. So, so.

Roger Harris: But it's.

Bob Kerr: Slick paper that folks are seeing their keystrokes, um, 88, 21 and 2848 and the, the system doesn't scale. So when I 2022 [00:16:30] or so IRS received fiscal 22. Irs received about 4.7 million of these. Um, or three? No, I'm sorry, I misspoke. 3.5 million. They received 3.5 million in 20 in FY 22. And then we wake up in FY 25 and IRS received 7 million of them, which in my. It's been a while since I have taken calculus, which this isn't, by the way, but that's two x. So the volume of forms doubles then. [00:17:00] Exactly. Roger. I had to dust off the dust off the calculator here. Um it you go from 22 to to 25, three years, four years inclusive, four years and it doubles. And um, the also IRS is not a linear function. So IRS doesn't you don't take 7 million and divide by 365 or however 220 or whatever. What, whatever number of days you want to use as your denominator [00:17:30] because the demand isn't constant. And for instance, April is a high demand period. So in I think this was April of 25, Iris received some 500 000 of them, and this was as much as 4000 a day. And so I am reminded of, of, of the old I Love Lucy show with Lucy and Ethel at the chocolate factory when they're trying to put the chocolates into the boxes. Right. And it's just.

Roger Harris: Just [00:18:00] started going faster.

Annie Schwab: Yeah.

Bob Kerr: Yeah. It just goes faster and faster. And Lucy and Ethel are trying to eat the chocolates in order to prevent them from having to put them into the boxes. So it's the and in seriousness, though, the issue is that there's, it's not there's it's not functionally electronic. And so if if the demand doubles, the only response. Well, Iris has two responses, one of which is used the same number of people, and they could take [00:18:30] twice as long. Or do you or to double the number of people, because that's the only way you can get there.

Roger Harris: Yeah.

Annie Schwab: And you're doing it by hand.

Roger Harris: You're doing it by hand. I don't even know if doubling the people. I mean, that's just I don't know how many people would it take to. Yeah, process 500,000 of any kind of form. I mean.

Annie Schwab: In a month.

Roger Harris: Well, in a month. Yeah.

Bob Kerr: I'm glad you asked. Roger. Um, the National taxpayer advocate in her report. Um, and [00:19:00] this is one of the, the gems in it, she published the number of hours that IRS devoted to CAF in that fiscal year. And I, if memory serves, it was 967,000 hours. So I round, you know, talk about it, it's roughly 1,000,000 hours. Um, and 1,000,000 hours. I just like Roger, you're, you know, you're, you're a businessman, you've, you've, you know, you've been at top of a small business for many years now, [00:19:30] but a million, a million staff hours, I just I couldn't comprehend. And so what I had to sit down and sort of do the back of envelope math in order to turn it into staff years. And when you turn into staff here, it's, it's about 465 of them or just under 500. So IRS needs 500 people to process 7 million of these forms. And [00:20:00] that's what they did in FY 20.

Annie Schwab: It's supposed to be in five days.

Bob Kerr: And it's.

Roger Harris: In five point.

Bob Kerr: You're making is a good one or is it's on point, which is that's supposed they're supposed to post in five days. I think IRS averaged 11. So IRS spent.

Roger Harris: Yeah.

Bob Kerr: Um, you know, Approximately 500 staff years.

Roger Harris: Twice as long.

Bob Kerr: And then I also converted. Then I converted those into dollars. [00:20:30] Right. And I made some assumptions. I, I just assumed a sort of mid-level grade five sitting in one of the service centers, and you start at $50,000 or a little more for their annual salary. And then you, you fully load it. So you add, um, benefits, you add quality assurance, you add overhead. You know, my, my boss when I was at IRS joked that you had to add, you had to add 37 seconds of the district director's time and three quarters of an inch of the ceiling tiles. Right? But in any event, by the [00:21:00] time.

Annie Schwab: You.

Bob Kerr: Load this, they're coming in about 104, $104,000 a year or 106. And so, you know, you put the math together, you get to $50 million IRS spent, you know, roughly five, roughly 500 staff years and roughly $50 million to process 7 million forms in twice the amount of time it's supposed to take.

Roger Harris: Yeah. And I think we we need to circle back because I think we need to make sure people understand because I, you know, I can imagine some people saying, well, [00:21:30] who cares if it's 5 or 11 days? What difference does it make? But timing can be critical. And, and, you know, I think that's in addition to the cost in dollars. Uh, and I think, Andy, I don't know if it was you or Bob alluded to the fact that sometimes we, you know, our clients aren't the, the most prompt in informing us when they get a notice or have a problem. And if they have a 30 day letter by the time we see it to begin with, we're lucky if there's five days even [00:22:00] left in the 30 days, and now we can't even get our authorization form processed before the letter runs out. So the the difference between five and I'm not saying if client if we got it back to five, our clients would still get us the notice sooner. But it's it makes the problem worse. And, and I think that timing is critical here. We can't just take the attitude, well, whatever it takes, it takes. You know, because, yeah, timing can be really critical.

Annie Schwab: Well, and it's like a snowball [00:22:30] effect. If you don't if you don't respond, then the automatic notices start coming out. And so now you've got that one and you've got this one. And really you've got the Po, but it hasn't been approved yet. And the client thinks that things are moving and they get something else in the mail. And it's just, it's, it becomes so cumbersome and costly. I get it, it's extremely costly. Um, both for the taxpayer, the tax practitioner, for the workers at the IRS, for everyone. So I, I don't know what the right time frame is. I don't know if one day, two day, five day is the right way. Maybe the notice [00:23:00] is, you know, a 30 day notice should always be a 60 day notice. I mean, there's no, there's no perfect scenario here, but the bottom line is they're taking so much time because it's either being faxed or mailed, and then it's being hand keyed in. And that's I mean, come on, we're 2026 here. So, um, so what's the fix? What's the what's the, you know, how do we how are we going to end this cycle of torture?

Bob Kerr: And one of the issues is, is that the volume is spiking for [00:23:30] a couple of reasons. And let me I'll put out two or 2 or 3 for you, one of which is that IRS is, is um. Is causing its own is stepping on its own feet when because you send a Po over to IRS and nothing, nada Paso nothing happened. And so five days later, what do you do? Roger? You send another one.

Roger Harris: Right.

Bob Kerr: So now instead of one, IRS has two of them to process. [00:24:00] And the reason for this is IRS is slowness in the first place. And so it's, it's a it's a. It's a it's a terrible downward cycle, right? So you have the, the, of the iris bringing on itself. You have um the, with there are a whole bunch of withdrawals that come as well, which is, you know, not only does IRS have to post to the calf when you, when a tax [00:24:30] professional wants to withdraw, they have to pull from the calf. So more, just more of them is naturally is going to lead to more withdrawals down downstream. Right. And then finally, and this is I think this is the, the probably the most interesting piece here. I mean, the first piece is interesting because it's something that would fix if IRS could could provide this, could post timely. Some, some chunk of this volume would go away because it's duplicative. But the other thing that's driving [00:25:00] it, I think, is that there's IRS is posting W and I transcripts, the wage and income transcripts, um, much earlier in the filing season. So you can get them in real time. You can get them before filing the current year tax return. I think that there's tremendous value for everyone here. I think this is you know, it's Oprah Winfrey. You get a car, you get a car and you get a car. It's [00:25:30] it's good for tax professionals because it helps us file more accurate returns. For instance, how many how many clients do you have? Roger that. Don't remember what kind of estimated tax payments they've made?

Roger Harris: Just about all of them.

Bob Kerr: And maybe estimated. That's probably not a very good exam because I don't know that that fall that doesn't fall in the W and I transcript does it.

Roger Harris: I think payments are there. Yeah.

Annie Schwab: The payments are there. Okay. But it might not be on the W9, it might be on the other one.

Bob Kerr: Okay. [00:26:00] And what's on there though is, oh, you change jobs or there's or a better there's some random 1099 from ETrade that comes through, right. Um, that you can, you can collect all these things together. One of the things that I think the upshot is that it prevents, um, problems with doc matching, it prevents CPE 2000. And the last thing that we want from our, [00:26:30] our clients is that CPE 2000. Because I gotta tell you, they think that we're, they think that we're the problem. And I gotta tell you also that I think generally they're the problem. But we live in a Taylor Swift world, so it has to be me. I'm the problem. Right? Right. So we we solve all of those issues. We perfect returns pre filing. And that's I think there's a huge benefit both to to the tax professional on, on our side [00:27:00] to the tax professional on the client. I think there's a huge benefit to the agency. So it sends a CPE 2000 to people who deserve them.

Roger Harris: Yeah. And what I was getting ready to say is, I think this is somewhere where you give the IRS credit because the our community has been demanding that those transcripts become available as soon as possible for all the reasons you articulated in the benefits of having them. And yet, at the same time, the mechanism by which we access those things [00:27:30] was not improved at the same rate as their ability to make them available. So it kind of maybe frustrates us even more to know there's something there that I can't get, even though it's there, uh, as effectively as I want to. And obviously the benefits of having a transcript. And I think more and more, Annie, you can speak to this from our group. I think more and more people are accessing those transcripts because they're available soon enough to make sure [00:28:00] that they do the return properly, or to Bob's earlier point, to make sure that these are clients that I even want to deal with in terms of, you know, if they bring me two, two out of 13 items that are on a transcript. I got to wonder, how long is this person going to be a good client? So again, I think you give them credit for speeding up the availability of the transcripts transcripts, but you've got to speed up the process for which I access them. But what are we seeing in terms of because I think that again, and [00:28:30] that creates more demand and the process isn't any better.

Annie Schwab: So especially with new clients, I think having access to that transcript is important. A lot of times, you know, your repeat clients, it's the similar forms that they get from year to year, you know, unless they change jobs or something. But I think having the earlier access to it, I mean, there's a, there's a lot of, there's a lot of clients who, you know, I know I had this 1099 r and I don't remember where I put it or this or that. And to call and request some of these duplicates. [00:29:00] I mean, a lot of it, you can get online and your online account, but if you're waiting on a duplicate of something that you misplaced or you tossed or you missed or whatever. It's very time consuming. And so being able to just log in and grab that information is quite helpful. And especially, you know, in the older communities, you know, the older population where, you know, they're not that familiar. New forms start coming out. Well, I mean, like there's every year there's a new form that you're supposed to get and hold on to. And [00:29:30] they're not familiar with the form, you know, the IP pin form. How many times has that been, you know, misplaced? Or they bring you the one from three years ago and you're like, well, you get a new one every year. I mean, there's all kinds of different reasons. Um, and so like I said, the earlier you can have access to that, probably, you know, it'll avoid the matching notices, which will avoid the going back and forth with the IRS, um, or just having, you know, something keyed in incorrectly or missing one or that kind of thing. Uh, you do [00:30:00] have to wait for those corrected, you know, the really complex 1099 that have, you know, multiple Whole pages. Those often get corrected and that will, you know, take a moment for the corrected version to show up there. But I mean, there's.

Bob Kerr: K ones also.

Roger Harris: Yeah. And I don't think I've been to a meeting at the IRS recently. Yeah. K ones. But every time I go to a meeting this topic comes up, you know. So Bob, from your perspective, there's [00:30:30] extra volume was predictable. You know, we we should see it. And yet every time I go to a meeting, the professional community says, you got to fix CAF. And the IRS says we're doing the best we can. So from your perspective, where's the disconnect? I mean, is this problem solvable? Is this a money problem, a people problem, a a focus problem? How do we fix this? Because I don't see. Well, I'm asking you a question. I'm [00:31:00] making comments at the same time. But I don't see this problem getting any better in the sense of the volume is going to continue to increase. So what do we do to make sure that this doesn't just continue to spiral out of control? Or can we do anything?

Bob Kerr: I think that there's a number of things going on here. Um, one of which is that. The IRS has for a long time, and I think particularly [00:31:30] in recent years suffered from this. And I, you know, I'm big on analogies. And so I'd suggest that the tablecloth is always too short on one end, which means that there's there's, there's too many demands on limited, uh, dollars and staff resources within the agency. But Roger, at the same time, that's true everywhere, right? It's not like IRS is somehow special in the sense that it has limited resources. It does have [00:32:00] limited resources. I don't believe. Well, I think that the the explosion, the whale tail in volume caught everyone by surprise. Well caught. Certainly caught IRS by surprise. Right. So it was fine. And it could kind of manage at 3 million or so, 3.5 million. And then overnight or within a couple of years from three and a half to 7 million. And that's, that's just a different game. So a [00:32:30] b it's it's I think it's a business process problem. Let's let's think about this. The the calf exists. And I am assuming, I don't know, I assume it started in the 60s when, you know, a handful of lawyers were sending over powers of attorney. And so you had a couple people that, you know, probably hand transcribed them to a list, right.

Bob Kerr: And then this is where we are today is just the evolution of, of that process. [00:33:00] But the. But the process doesn't really make sense anymore. It makes sense at a volume of 700. It doesn't make sense at a volume of 7 million. So I think I think this is a case of of, you know, you boil the frog slowly. What I I'm I'm, I find comforting to hear is that this becomes an issue with some frequency among industry, among um, tax professional partners [00:33:30] talking to IRS because I, I am a believer that the squeaky wheel does get the grease. So I think that I think that there's some there is some hope here. And for, for what it's worth, I just I don't think the agency has a choice. I don't know where it's what what happens if it's not 7 million but nine? Now where is IRS finding 600 700 staff to process these? It's just it it right. I [00:34:00] mean, I, you know, I haven't been in, I haven't been an employee for many, many years now. And so my, my, my vision and my, my view is that an obstructed one, but I just don't see it. I don't I think it becomes it has moved its way up the priority list because it's just become a heftier problem. Does that make sense to you?

Roger Harris: Yeah. And I think it's going to take a technological technological solution to some extent. You just you can't put [00:34:30] enough people in the room to, to do it at the volume we're heading to. And, and one other thing we have to remember that it's not just tax professionals that are trying to access transcripts, that permission. You've got people in the mortgage business who have to verify that people's taxes are paid, and people who have to prove that their current and their taxes, there's there's all kind of other outside industries that are clogging up this same system besides just the tax professionals, and I don't see any of that declining. [00:35:00] It's going to continue to grow and continue to put more stress on the system.

Bob Kerr: Yeah. The data is so powerful, so useful. And so you can imagine a world in which all kinds of non-tax purposes, you know, on non-tax uses for it. I can imagine an identity theft organization wanting access to it, right. Which of course has nothing to do with.

Roger Harris: They hadn't already got it.

Bob Kerr: Um, but having sort [00:35:30] of a pipe to it rather than, you know, this, um, so that they, there is a lot of non-tax demand for the, just on the, on the Tia side. And that's, I don't see that doing anything but growing.

Annie Schwab: The complexity of the tax law is not going, going away. So we're going to see more need more assistance, more matching, more access. So that's another reason. [00:36:00]

Bob Kerr: And ideally, you know, to me, but again, it's I don't have the, the clarity of, of sight here. What you want, I think is an 88. I think we can split this problem. I think we can split the 8821 the TIA from the Po. I think the TIA is an easier problem to solve. And so I can imagine a world because I, I, my, my, my fantasy world is sorely lacking. So my fantasy [00:36:30] world is one in which we can use. You have an 8821 that you just send through MF you know, modernized e-file, you just hit the hit the send button and poof it posts. And I don't know, I mean, you'd have to rewrite the entire system to do it because the way the system is, is, is built right now. And so I don't know if that's realistic, but that's, that's my vision of the future.

Roger Harris: And I guess I'm going to ask this question to Bob and also ask it to Annie. [00:37:00] Given the current state of where we are, um, the advantage of getting access to transcripts as soon as possible. What do we tell people? Or is there anything that they can do to try to improve their situation or their client situation? What, what do we tell someone faced with a problem that we don't see a short term fix for, and yet we want that information? Bob, I'll let you go first. And Annie, what [00:37:30] do you tell somebody? I mean, what do you do?

Bob Kerr: My my first cut at this Roger is I, I I'm I'm a linear thinker. And so I always sort of look at a situation, look at a problem. And I try to, you know, sort of split it into forks, right. And so as a tax professional, I'm going to look at my world at as a one one lane is existing clients, and then another lane is, you know, new clients or representation clients or both or whatever.

Roger Harris: New people, right? [00:38:00]

Bob Kerr: If I have existing clients, I think I want to have, I don't need to wait until the filing season to put up an 8021. And they're good for as many years back as you want and three years forward so that we can be proactive here. I think that's my one, my one useful piece of advice here. So if you want that information, you can make it happen. And you don't it doesn't have you know what I mean. [00:38:30] It doesn't have to happen every year. Uh, you can, you can get some, you can wrap your arms around some of the, of the cadence on it.

Annie Schwab: So like a blanket, you know, get at this from everybody, you know, make sure you have one on file that's current and that way, you know, there's not this, this rush of trying to get these things processed.

Bob Kerr: Um, right. I mean, you could do any, you could do every, you could do every October. You take one third of your clients and you run [00:39:00] them, you run them through because it's good for three years.

Annie Schwab: Mhm.

Roger Harris: Yeah.

Bob Kerr: And I mean, I don't know that that works. This is just me sort of staring at the ceiling tiles.

Roger Harris: No, no, no. I think maybe what you got.

Annie Schwab: I mean, mine is. I've always been a huge proponent of you have to train your clients. You have to educate your clients. Yeah. You know, you you're not certain what came through the mail. You're not sure if I need it or not. Put it in a pile. Get it to me ASAP. Use a portal or whatever technology [00:39:30] you have for your clients to get information. When in doubt, send it to me. Let me see what it is. Um, you know, collect this stuff, open the mail, you know, actually do what you actually do, you know, because the, the training the clients to be, you know, on time, bringing you the information, contacting you with a notice, any kind of information that you get in the mail, even if you're not sure what you're supposed to do with it, you know, [00:40:00] don't let it sit there because time is of the essence. And so, I mean, I've always said training your clients, um, is, is important.

Roger Harris: Yeah. And I think like anything we talk about in terms of efficiency in an office requires a system. So you need to figure out what is the system that's going to work best for you to incorporate Bob's suggestion of getting these authorization forms well in advance of a filing season. So by the time they come in with their data and the transcripts available, [00:40:30] all you have to do is access it. You don't need to go through this delayed process of getting approval. So what's your system for doing that? Do you do to your point in October? Is it part of your organizer package? And this isn't something that you as the owner have to do. This can be delegated and tracking and keeping up with it. The new clients, I think, and these people would notice is to me it's about managing expectations. Uh, which I think there's a lot of things in life that are important if we manage the expectations [00:41:00] of our clients. To your point, Andi, have to understand that this is the way the system is working. And you can't come to me today with something that requires a transcript and expect me to have it in the next five days or four days. There is there is a certain amount of expectation that has to be created. So you do open these notices and furnish them to us. You do get to things to me earlier because we just don't have the ability to change the system right now.

Annie Schwab: I agree with you, Roger. [00:41:30] I think that's a fair point. Um, and although we can be hopeful that changes are coming and, and these reports are coming out and identifying the problems, um, encouraging people to act swiftly. Nothing moves fast. You know, at the IRS, I it'll be years before, you know, this all goes paperless in my opinion. But, you know, staying staying involved in it in the know. Um, and some of these articles like [00:42:00] these are great. I mean, the, the more pressure we put, the more we, you know, acknowledge the, the difficulties in this and the heartache that it's causing and the waste of time and money and people and all the things. Um, maybe it'll speed it up. I, you know, I don't, I don't know, even if you threw all the money you could at it, how fast we could actually do it. But, um, you know, putting it out there is important.

Roger Harris: I don't know where the priority at the service is. I mean, obviously their first goal during a filing season [00:42:30] is to get refunds out as quickly as possible. And so all their effort goes into that. I don't know where this ranks in their priority of, you know, important things to solve. Um, but I guess we'll find out because, uh, it is a problem that we all recognize, but it's not getting better.

Annie Schwab: Mhm.

Bob Kerr: If this were an easy problem to solve, IRS would have solved it already, right. And I think I have a great deal of sympathy for the agency here because it has, you [00:43:00] know, it just has this antiquated system. Then all of a sudden it sort of gets the, you know, I use my Wile E coyote example of this grand piano hurtling towards you, and all you have is a tiny little umbrella to protect yourself. And so the agency wasn't expecting this. And it probably someone there probably knew this wasn't the right way to do it, but it works well enough and it works well enough until it doesn't. And I think we've gotten to the point that it doesn't work well enough [00:43:30] anymore.

Roger Harris: No, I think you're right. I want to get to one thing unrelated to this, but is there anything else on this, Bob, that you want to leave our listeners with? Because I got one thing, another thing that Bob did recently that I wanted him to talk.

Bob Kerr: About one thing to close on this. Roger. I, I if we only remember one thing from here, I. And maybe this is overly obvious. I think that people look at transcripts as a tool that are solely related to [00:44:00] representation work. Oh, I only need transcripts when I, you know, I have an exam or a collection nonfiler type of client. And I like if we're only walking away with one thing here, I'd like people to, to understand that the, the contents of the transcripts are incredibly useful for current year filing.

Roger Harris: Right, right.

Annie Schwab: Yeah, I agree.

Roger Harris: All right. Bob did something this year that I guess he's the only [00:44:30] person that I really know well enough to ask about it. You volunteered as a Vita tax preparer this year.

Bob Kerr: I did.

Roger Harris: Um, and what I'd like to know is how was that experience? What led you? What made you do it? Did you any surprises? Anything that you want to share? Because again, it's it's an interesting it's different than what most of us and our listeners deal with. Yeah, it's the same. We're doing the same function, but we're doing it with a different group and in different environments. [00:45:00] And there's no money in it. We're not trying to make money off of it.

Bob Kerr: So there's no money in it for us.

Roger Harris: At least to do it. Well, yeah. For us, yeah. We don't make any money. So I mean, is it something that we should all consider doing because it's not a full time job?

Bob Kerr: No. I tell you what, Roger, I, I, I appreciate the question. I and this might sound a little hokey, uh, this, this industry that you and I have, we, in fact, all three of us have chosen. And we've spent our. I don't know about Annie, [00:45:30] but I believe that you and I have spent our entire careers in this space. It's been it's been very good to me, and I want. I wanted to find a way to give back, and this is the obvious way to do it. The other piece of it is that it's a way to give back not only to this profession, but also to your to your local community. You're helping folks who have in general, fairly simple returns that they can't do themselves [00:46:00] or they are. I would say they can't. They, they, they simply don't have the ability to do it themselves. And I'm not speaking disparagingly of the clients. It's just where they are. Right? And so you're able to provide a great deal of assistance, make, make a lot of make a difference. The clients were in some ways they were largely what I thought they would be. Um, lower income, probably almost entirely under $35,000. And again, [00:46:30] let me provide context. This is Washington, D.C. it's a very expensive place to live. So lower, lower income folks who, um, qualified for credits of one sort or another. Um, and it was also I heard a lot of things theoretically about how complicated these returns can be because it's in part it's because the tax law is complicated [00:47:00] in part is because some people live complicated lives and to, to be able to help people sort of grind through that and come out the other side with whatever credits they're entitled to. I found it quite rewarding.

Roger Harris: So are you going to do it again.

Bob Kerr: If they'll have me back? Yes, yes, I yes, I'm sorry. That's not a great answer. Yes, I plan to do it again.

Roger Harris: Yeah. No, it's just an interesting perspective. And you can imagine [00:47:30] again, any you deal with our offices where we're dealing with what we think are sophisticated clients, and the confusions and the lack of knowledge that they bring. I can't imagine that the people, you know, that come into a vitacyte who might have tips or got paid overtime, you know, their lack of understanding of even that. You know, it's just a different level. And I commend you and others that do that. But, uh.

Bob Kerr: Well, Roger, by the way, I have one more observation, if I may, and [00:48:00] this will go back to my my time as the government affairs guy for the enrolled agents. And I used to think and this was, I don't know, 15 years ago when I would see the AGI limit for for Vita. And then it was probably, I don't know, 52 or so. And I thought I took it personally because I, you know, I'm the EA's guy. And so I, I'm all for the EA's. And I thought, well, they're, you know, this, this is crazy. It's taking it's taking business away from my people. And [00:48:30] then I go and spend a whole filing season and a Vita site. And I'm like, I know this is not this is not taking away business from my people know these, these and this is not I don't mean to be condescending or unkind. These are not our clients. They're not. And they need help.

Roger Harris: Yeah, they do, and I'm just glad somebody's providing it to them. All right. Anything else for Annie? What do we need to do before we wrap up?

Annie Schwab: No, [00:49:00] this is this was great. I hope the audience found this very, um, you know, informative. Um, thank you again, Bob, for joining us. I my pleasure, I greatly enjoyed spending time with you on our second podcast. Um, so yeah, I don't really have any other items, um, other than I appreciate all the listeners and hope that, um, I hope that you continue to listen, tell some friends. So we'll be back.

Roger Harris: Bob, any closing comments on your end before we wrap up?

Bob Kerr: No, just, just again, thank you for, for [00:49:30] having me on. It's always a pleasure to be hanging out with the two of you. And, um, yeah, that's really, that's all I have today. Thank you.

Roger Harris: All right. Well, thank you for joining us again. Thank you for for your insight into this issue. I mean, your taxonomy article kind of spurred this on. And so we, um, as you continue to write and find other areas like this, we'll get you back on here and talk, talk about them again. So [00:50:00] thanks, Bob. Thanks for being here. And as always, thank you for everything you do to our listeners. Thank you for listening. Hope you enjoyed today's Federal Tax Update podcast, and hope you'll join us again in a couple of weeks for another one. And, uh, as Annie said, tell your friends about it. So thanks everybody, and have a wonderful summer and we'll see you again on our next Federal Tax Update podcast.