TOP QUESTIONS DURING NTA TOWN HALL AT THE IRS NATIONWIDE TAX FORUMS:

By: Erin Collins, NTA

As the National Taxpayer Advocate, one of my roles (and the role of the Taxpayer Advocate Service (TAS)) is to serve as the “voice of the taxpayer” within the IRS. As I often say, “I can’t be a voice unless I listen.” Throughout the summer, I heard many similar problems tax professionals are experiencing from one coast to another.

Because so many important issues were raised during the town halls, we will address them in a two-part blog. Here, in Part One, we are covering the top pandemic-related questions and issues that tax professionals and their clients are still having trouble navigating. In Part Two, we will dive deeper into questions regarding tax return preparation and processing, address concerns about some IRS forms, notices, and letters, and provide helpful resources.

Employee Retention Credit

Not surprisingly there was a lot of discussion at the tax forums concerning the Employee Retention Credit (ERC). The ERC is a pandemic-era refundable tax credit intended to help businesses and tax-exempt organizations that continued to pay employees during the COVID-19 shutdown, or businesses that had significant declines in gross receipts. Additionally, employers may be eligible for the ERC if they opened a qualified recovery startup business. To add additional complexity, eligibility requirements are different, depending on which periods in 2020 or 2021 for which the ERC is being claimed.

UPDATE: In response to the surge of questionable claims, the IRS announced on September 14 a moratorium on processing any new ERC claims until at least the end of this year. This action is intended to protect honest small business owners and give the IRS time to review existing ERC claims for compliance.

Interest and Penalties Accrued During the Backlog, Statute of Limitations, and When Will Collection Notices Resume

A large percentage of questions during the town hall conversations involved tax professionals with clients who are still impacted from the IRS backlog of processing paper tax returns and correspondence.

Many of the questions concerned erroneous interest and penalties that accrued during the backlog when a taxpayer filed timely or responded to a notice or letter in a timely manner but are still waiting a response from the IRS or a resolution for their tax issue.

The short answer for these situations, is generally taxpayers should be able to get the IRS to remove the interest and penalties, if they timely filed. To prove timeliness, a taxpayer or tax professional can typically show proof of mailing.

Tax professionals with clients improperly assessed interest and penalties should follow these steps to remedy the issue:

• Step 1: Contact the IRS by calling the Practitioner Priority Service line at 866-860-4245.
• Step 2: Show proof of mailing (be sure to keep the originals and send in copies of proof of mailing to the IRS).
• Step 3: If this does not resolve the issue, contact TAS, fill out, and mail or fax Form 911.

Taxpayers Who Did Not Receive the Third Stimulus Payment

We heard from many tax professionals across the nation about taxpayers who never received the third-round economic impact payment (EIP), otherwise known as a stimulus payment.

The third-round EIPs were authorized by the American Rescue Plan Act of 2021 and were sent to eligible individuals starting in March of 2021. By December 31, 2021, the IRS issued all third-round EIPs. Some families and individuals may not have received any EIP, or received less than the full amount of EIP, because their circumstances in 2021 were different than they were in 2020.

Read the full article here