E-file, e-file, e-file: requirements dominate IRS Liaison Meeting.

• Author: Ascierto, Jerry
• Position: FederalTax; Internal Revenue Service

E-filing issues made up the bulk of the discussion at the CalCPA Taxation Committee's annual IRS Liaison Meeting, held Nov. 12. Attendees discussed a range of issues, including possible regulation and certification of federal tax return preparers--other than CPAs, enrolled agents and attorneys--who prepare more than five tax returns a year, and abusive tax avoidance transactions.

IRS officials also said they would like to improve the efficiency of the agency's audits, targeting turnover rate improvement at all levels.

E-filing

Gerry Kelly-Brenner, a senior tax specialist with the IRS Small Business/Self-Employed (SBSE)-Taxpayer Education and Communication Division, fielded many e-filing questions, but it was the first, "Why are those who e-file treated differently than those who paper file?" that opened a Pandora's Box of comments.

This issue includes the IRS practice of suspending a practitioner for two years from the e-file program for past infractions. Audience members felt that the eligibility requirements governing e-filing are onerous, outdated and lacked materiality.

Some members of the audience took exception to the fact that the IRS can suspend a practitioner from the e-file program for owing less than $100 to the IRS (on a Form 940, for example). Some said there needs to be some sort of materiality governing the e-filing eligibility requirements; that a $22 infraction, for example, should not be equated with larger, more serious infractions.

"All the facts are looked at in determining eligibility," said Kelly-Brenner. "There are actually three levels of infractions with applicable sanctions for each, and practitioners that have been denied participation in the IRS e-file program have the right to an administrative review and may submit further consideration to the Office of Appeals, as appropriate."

Joe Benton, area director, Taxpayer Advocate Service, said if being rejected or suspended from e-filing and working through normal channels is causing significant delays, or the administrative review system is not working and is affecting a practitioner's livelihood, then these events would meet the criteria for bringing the situation to the Taxpayer Advocate for consideration.

Although the IRS Electronic Tax Administration (ETA) governs and sets e-filing eligibility requirements, the IRS Office of Professional Responsibility has jurisdiction over Circular 230. "There are discussions of bringing the e-file suitability requirements and...