What concerns are top of mind as practitioners move into the coming tax season? For small firms, dealing with the IRS is usually high on the list. In fact, it was a top challenge identified by firms with 2 to 10 professionals and those with 11 to 30 professionals in this year’s PCPS CPA Firm Top Issues Survey.
When I talk to CPAs around the country, one of their biggest concerns is the time and capacity required to address IRS issues. When resources are tight, spending hours trying to resolve a client issue can have a significant impact on your practice. Practitioners face long hold times, difficulty reaching the right person, and IRS notices that require considerable follow-up to resolve.
This month, I asked Melanie Lauridsen, Vice President, Tax Policy & Advocacy at the AICPA, to share insights and ideas based on what she is hearing from practitioners. She has found that when they face challenges in resolving complex cases efficiently, their top concerns include:
Lengthy resolution times for complex cases, particularly amended returns, identity theft cases, collections matters, and certain correspondence examinations
Difficulty obtaining timely responses to written correspondence, with practitioners sometimes waiting months for case updates or action on submitted documentation
Inconsistent case handling, where practitioners receive different answers depending on the IRS employee or function handling the matter
Notices generated before prior correspondence has been processed, creating confusion for taxpayers and requiring additional follow-up
The following best practices, based on what Melanie and I have seen in practice, can help practitioners reduce the stress associated with these common challenges.
Cut to the chase
Before reaching out to the IRS, you can speed the process by being ready with authorization, notices, correspondence, supporting documentation, and a clear understanding of exactly what you need resolved. Be persistent, stay organized, and document every step you’ve taken.
In addition, don’t hesitate to escalate, Melanie says. For example, when the issue is a systemic delay, hardship situation, or a breakdown in normal channels, practitioners should consider the Taxpayer Advocate Service or other designated IRS escalation processes.
Avoid the phone lines
It’s smart to try to skip the phone altogether, according to Melanie, and instead match the issue to the right IRS channel. “As the IRS continues to transform its operations, practitioners who keep current on new digital tools, electronic processes, and service enhancements are often able to resolve issues more quickly than those relying on older approaches,” she said. “While complex cases can still require persistence, using the right channel at the right time can significantly improve outcomes for both practitioners and their clients.”
Practitioners should be aware of resources, which include:
Tax Pro Accounts enable you to request power of attorney and tax information authorization, see taxpayer information, and withdraw authorizations. In general, online authorization tools can often resolve in minutes the issues that previously required lengthy correspondence or phone calls.
Transcript Delivery Systems provide quick access to client transcripts and can demystify the IRS’s CP53E notices.
The Practitioner Priority Service is a professional support line with representatives specially trained to handle practitioners’ account questions. (Contact PPS at 866-860-4259.) It is one of the most valuable resources for resolving account issues, obtaining transcript information, and addressing many routine case matters more efficiently than general taxpayer service channels, Melanie notes.
Stay current on IRS developments and evolving procedures
Stakeholder engagement opportunities can be a great source of information and insights on current procedures, emerging issues, and best practices for working with the agency. IRS outreach events, practitioner liaison meetings, and stakeholder forums are good places to engage, Melanie notes. The IRS Stakeholder Liaison programs and practitioner outreach events remain valuable resources that practitioners should fully utilize.
Set client expectations
Practitioners often must reassure a concerned client, explain a notice, check its accuracy, and then work through the issue with the IRS. Clients may assume the CPA has done something wrong, but proactive communication can help maintain their trust. Set expectations by keeping clients informed about what you’ve done, what you’re waiting on, and what is outside your control.
Also, don’t reinvent the wheel every time an issue occurs. Because the entire effort can consume a great deal of capacity, create a process for tracking IRS matters, follow-ups, and deadlines so you aren't continually starting over. You may not be able to control how quickly an issue is resolved, but you can control your process, how well you communicate with your client, and how consistently you follow up.
Build a better experience
The good news is that the IRS is receptive to feedback and recommendations from the profession. “We have had good conversations with the IRS and offered to partner with them to encourage and facilitate continued transformation,” Melanie said. The AICPA regularly elevates practitioner concerns to IRS leadership, often resulting in clarifications, procedural changes, administrative relief, or improvements to IRS operations, she noted. The AICPA also offers tax-related toolkits and resources, such as the Town Hall Series or Washington Tax Brief, to keep members up to date on IRS developments and help them effectively navigate the process.
With upfront preparation, smart use of technology, proactive communication with clients, and timely knowledge of IRS processes, practitioners can improve the tax season experience for themselves and their clients.
Stephanie Otero, CPA, is the Association’s Vice President—Small Firm Advocate. Have questions for Stephanie? Contact her directly at stephanie.otero@aicpa-cima.com. To stay ahead on issues affecting CPA firms, the PCPS Small Firm Success Series offers strategies on staffing, technology, compliance, and practice management. The series is free to AICPA members and provides CPE.
We welcome your suggestions and feedback on how the AICPA can better support small firms.