The IRS has the dubious honor of being the worst thing tax professionals at smaller firms had to put up with this year, according to a survey of accountants.
Frustrating interactions with the IRS topped the list of challenges faced by sole proprietors and accounting firms with 10 or fewer employees, beating out other difficulties such as finding qualified staff and keeping pace with complex and ever-shifting tax law changes, according to the results of a survey conducted by the American Institute of CPAs and Chartered Institute of Management Accountants.
For tax professionals at larger firms, IRS-related challenges are still among their top three concerns. The results, released June 7, show that difficulties with the agency became a more pressing issue for tax professionals across the board compared with last year.
The survey asked the 752 respondents to rank their top issues and was conducted from April 19 to May 23.
AICPA President and CEO Barry Melancon attributed tax professionals’ frustration to having to operate within what he deemed “a dysfunctional system” that he said is making it “almost impossible for our tax practitioners to do their job well.”
“The challenges of the IRS are as extreme as they’ve ever been,” Melancon said during June 8 remarks at the AICPA’s ENGAGE conference in Las Vegas. Thanks in part to AICPA feedback, the tax agency faced more scrutiny from both Republicans and Democrats in Congress “than any time I can remember,” he said.
Melancon acknowledged that the challenges on the IRS’s side are multifaceted and that long-term solutions, particularly related to funding and modernization, are needed for the agency to get healthy. However, more money and better technology won’t fix the IRS’s short-term issues — many of which are self-inflicted, he said, citing its reluctance to acquiesce to some of the AICPA’s recommendations on penalty relief — or the debacle around schedules K-2 and K-3 for passthrough entities.
Melancon also singled out the delays that tax professionals face in obtaining permission to contact the IRS on behalf of clients just to have simple requests answered. “The complexity and the administration just is an untenable element,” he said.
The IRS had to reckon with unprecedented demands on its services from both taxpayers and tax professionals over the past year. National Taxpayer Advocate Erin Collins flagged the agency’s “horrendous” taxpayer service as the IRS’s most pressing problem in her 2021 annual report to Congress.
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