IRS to Host Second Real-Time Tax System Meeting
January 18th, 2012 by Raymond Grove
The Internal Revenue Service is seeking additional input on its vision of a real-time tax system that would move the IRS away from the traditional “look back” model of compliance to an upfront approach providing immediate feedback on the accuracy of information provided in tax forms. The first meeting was December 8th, which Convey attended, and was primarily seeking feedback and input from outside stakeholders, representatives of consumer groups, the tax professional community, and government representatives. This second meeting will feature representatives of large and small businesses, financial institutions, software providers and state revenue commissions.
Currently, the IRS conducts most compliance activities several months after the tax return has been filed and processed, meaning it is not uncommon for taxpayers to receive notices 12 to 18 months after filing. This inefficiency clearly creates many problems and frustrations for both taxpayers and the IRS. Under the proposed system, the IRS could match information submitted on a tax return with third-party information upfront when it is first filed. This would provide the opportunity for taxpayers to fix the tax return before acceptance if it contains data that does not match IRS records. The goal of this initiative is to improve the tax filing process by reducing burden for taxpayers and improving overall compliance.
As we have stated in the past, the proposed system is a good way to reduce the tax gap without raising actual taxes. The IRS has made it clear they believe in tax information reporting as a major tool in combating the $450 billion tax gap, as seen through frequent changes and additions to regulations these past few years. These new reporting requirements have made compliance more difficult and complex than ever; signaling the IRS focus and commitment to improving compliance now and well into the future. Convey will be attending next week’s meeting in Washington D.C., and we look forward to sharing the discussion with you.
Tags: Compliance, IRS, Real-Time Tax, TIN
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