IRS Advisory Committee Urges Major Reforms for Tax Filing System

Internal Revenue Service (IRS)

WASHINGTON, D.C. — The Internal Revenue Service Electronic Tax Administration Advisory Committee (ETAAC) has released its 2024 annual report, presenting a comprehensive set of recommendations aimed at improving tax administration. The report includes 12 key recommendations—three directed at Congress and nine at the IRS itself.

One of the primary suggestions to the IRS involves enabling application programming interface (API) access to taxpayer information. This change could revolutionize how taxpayers and their preparers interact with the IRS, making processes more efficient and user-friendly. The committee also urged the IRS to eliminate barriers to electronic filing by developing an alternative to the current self-select PIN system. Additionally, they emphasized the importance of fostering greater information sharing between the IRS, state tax authorities, and industry partners.

“ETAAC members serve as trusted advisors to the IRS on key issues of interest to tax administration and taxpayers,” said IRS Commissioner Danny Werfel. “The committee has helped on a variety of fronts to help improve tax administration. The IRS leadership team will carefully review the recommendations in this report.”

The recommendations to Congress are equally significant. ETAAC calls for granting the IRS authority to regulate non-credentialed tax return preparers, ensuring that all preparers meet minimum standards of competency. The committee also stresses the need for consistent and reliable funding for the IRS to support effective tax administration. Furthermore, they advocate for increased funding for the National Taxpayer Advocate, an independent office within the IRS that assists taxpayers in resolving problems.

The annual report was unveiled on June 26, 2024, during a public meeting in Washington, D.C. At this session, IRS Deputy Commissioner Douglas O’Donnell expressed gratitude to the 11 committee members whose terms concluded on the same day. These members include influential figures such as Jared Ballew of Taxwell, Peter Barca formerly of the Wisconsin Department of Revenue, and Timur Taluy, the ETAAC Chair and founder of FileYourTaxes.com.

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The implications of these recommendations are far-reaching. Enhanced API access could lead to smoother, faster interactions between taxpayers and the IRS, reducing the time spent on resolving issues and increasing overall efficiency. Removing obstacles to electronic filing can lead to higher adoption rates, making tax compliance easier and more accessible for all taxpayers. Improved information sharing between the IRS, states, and industry partners can help detect and prevent tax fraud more effectively.

Granting the IRS authority to regulate non-credentialed tax preparers could protect taxpayers from incompetent or unethical practices, ensuring they receive accurate and reliable assistance in preparing their returns. Reliable funding for the IRS is crucial for maintaining its operations, advancing technology, and improving customer service. Increased support for the National Taxpayer Advocate can enhance its ability to assist taxpayers and address systemic issues within the IRS.

These recommendations reflect a concerted effort to modernize the tax administration system, making it more responsive to the needs of taxpayers and better equipped to handle the complexities of today’s tax environment. As the IRS and Congress consider these proposals, the potential for a more efficient, secure, and fair tax system looms large, promising significant benefits for both taxpayers and the nation as a whole.

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