A coalition of 11 CPA and tax professional trade groups today asked the Internal Revenue Service to discontinue collections and other compliance actions until the agency can address its backlog of tax filings and customer service issues.

Specifically, the coalition called on the IRS to “discontinue automated compliance actions until the IRS is prepared to devote the necessary resources for a proper and timely resolution of its challenges” in a letter sent to Lily Batchelder, assistant secretary for tax policy at the Treasury Department, and IRS Commissioner Charles Rettig.

The letter comes after the National Taxpayer Advocate (NTA) reported to Congress last week that the IRS is taking months to process taxpayer responses to notices, further delaying refunds and in some cases leading to premature collection notices and even liens.

The IRS sends “numerous mistargeted notices, liens and levies” because it “has not taken reasonable actions that would meaningfully reduce unnecessary burdens during this upcoming tax filing season,” said the coalition, which includes the American Institute of CPAs (AICPA), the National Society of Accountants and the National Association of Tax Professionals.

The NTA found the IRS’s backlog of unprocessed returns has hit the 8.5 million mark.

Additionally, the IRS is only answering 9% of all calls and only 3% of calls regarding individual income tax returns, “which prevents taxpayers from resolving these straightforward issues,” the coalition said.

“To reduce the need for taxpayers and tax professionals to communicate with the IRS due to the persistent and erroneous notices,” the coalition said, the Treasury and the IRS should take the following steps to take the burden off of taxpayers and their tax professionals:

• Discontinue automated collections and compliance actions until the IRS “is prepared to devote the necessary resources for a proper and timely resolution of the matter,” the coalition said.
• Align taxpayer requests for account holds with the actual time it is currently taking the IRS to process penalty abatement requests.
• Offer a reasonable cause penalty waiver, similar to the IRS’s existing first-time penaltiy abatement (FTA) administrative waiver. An FTA can be obtained for a failure-to-file, failure-to-pay or failure-to-deposit penalty. A taxpayer may claim an FTA for only a single tax period, but the coalition says the new waiver should not impede taxpayers’ ability to also receive a FTA in subsequent years.
• Give taxpayers targeted relief for both underpayment of estimated tax penalties and late payment penalties for both the 2020 and 2021 tax years, in recognition of the IRS’s processing backlog.

Even the Treasury Department and IRS “are under no illusion that [the 2022 tax season] is going to go smoothly,” the coalition said, noting that Treasury officials said in a call with reporters earlier in January that they recognize that the IRS is “unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs.”

“It is time to take steps to ameliorate the situation. Implementing reasonable penalty relief measures, that the IRS can offer immediately, are necessary to help not only taxpayers and tax professionals but also the IRS during these challenging times,” the trade groups said in their letter.