A guide to dealing with today's IRS.

• Author: Wolfe, Larry J.

EXECUTIVE SUMMARY

* In today's environment, a tax practitioner must be patient and document all contact with the IRS.

* Although the IRS is opening correspondence within the normal time frames, processing is taking longer than usual.

* Practitioners can obtain assistance with their clients' tax issues from a variety of sources in the IRS including the Practitioner Priority Service, a local stakeholder liaison, the Taxpayer Advocate Service, and others.

* Make sure to carefully read every notice sent to a client. Because notices are changing, double-check due dates and appeal rights that are being offered. Even though the IRS has said that no further action is needed once a notice is answered, a practitioner should generally follow up with the IRS after 60 days if a response is not received.

* For cases going to Appeals, practitioners should obtain a copy of the taxpayer's administrative files, either through the case file access procedures or a FOIA request.

This article provides practical suggestions to help practitioners navigate the process of resolving issues with the IRS. During the past two years, dealing with IRS Collection, Examination, and Appeals has been especially challenging. The information presented here about "working the system" through knowledge of processes and procedures is subject to change, and a practitioner should monitor the IRS website to keep up to date on the latest resumptions or disruptions of services and other developments.

Due to the COVID-19 pandemic and reduced personnel, practitioners should expect continued delays from the Service in live phone support, answering mail from taxpayers, reviewing paper returns and (even) e-filed returns, and processing payments, among other issues resulting from current challenging circumstances.

Status of processing Forms 1040 for 2020

As of this writing, the IRS is opening correspondence within the normal time frames, but processing is taking longer than usual. Practitioners should be patient and follow up with all correspondence within 60 days. Paper and electronic individual Forms 1040, U.S. Individual Income Tax Return, received prior to April 2021 have been processed if the return had no errors and did not require further review. The IRS says that, as of Nov. 12, 2021, it had 5.9 million unprocessed individual returns. The IRS suggests that taxpayers who have not received refunds visit "Where's My Refund?" at irs.gov/refunds to check the status.

Status of processing Form 941

As of Nov. 17, 2021, the Service had 2.4 million unprocessed Forms 941, Employer's Quarterly Federal Tax Return. If a Form 941 was filed electronically and an acknowledgment was received, no further action is needed other than responding to notices and requests for information. The IRS advises taxpayers not to file a second return. The inventory of Forms 941 is being processed at the Cincinnati and Ogden Service Centers.

Status of processing Form 1139 or Form 1045

Expect long delays. Mail the Form 1139, Corporation Application for Tentative Refund, or Form 1045, Application for Tentative Refund, by certified mail and include a cover letter. A practical way to confirm receipt is to include a check payable to the U.S. Treasury for $1. Apply the check to the tax and period of the amended return and attach a cover letter with the return and check.

Sending checks to the IRS

Expect delays in processing checks up to 60 days or more. Fortunately, payments are applied on the date they are received and not when they are processed. The IRS has been forgiving dishonored check penaltiesif checks do not clear because of processing delays. This applies to payments received from March 1, 2020, through Dec. 31, 2020, according to information on the IRS website as of this writing.

For checks that were dishonored in 2021, one can, as a practical matter, request penalty abatement due to processing delays. Attempt to substantiate that the funds were available in the bank on the date that the check was mailed to the IRS. The preparer will need to show reasonable cause to receive penalty relief.

e-Services

Sign up for e-Services to be able to receive transcripts through a secure mailbox and be able to file a power of attorney through the IRS's new platform, Tax Pro Account, available at www.irs.gov. E-Services is available 24/7. The phone number to reach the e-help desk for tax professionals is 866-255-0654, and hours of operations are 7:30 a.m. to 7 p.m. ET.

Practitioner Priority Service

The Practitioner Priority Service (PPS) will assist practitioners with their clients' tax issues, including misapplied payments, math errors that need correction, account adjustments, balances due, and missing returns. Under a recent change, PPS assistors can no longer take actions for collection activities, including short-term payment plans and installment agreements; these matters will require contacting the Small Business/Self-Employed (SB/SE) Division's Automated Collection Service (ACS). To reach PPS during the normal operating hours of 7 a.m. to 7 p.m. ET, call 866-860-4259. (After hours, try calling the Automated Collection Service at 800-829-3903 or 800-829-8374.)

PPS will route calls based on callers' selections:

Press 1: General tax law questions.

Press 2: Questions about individual accounts not in collection or examination status that involve issues concerning locating and applying payments, general procedural guidance and time frames, making adjustments, providing taxpayer transcripts, securing taxpayer income verification, forgotten/lost CAF numbers, and explaining IRS communications. Calls are limited to five clients and 30 transcripts per client (increased from 10 transcripts on Nov. 15, 2021).

Press 3: For questions on business accounts not in collection or examination status that involve issues concerning locating payments, making adjustments, general procedural guidance and time frames, providing taxpayer transcripts, securing income verification, employee identification number verification, forgotten/lost CAF numbers, and explaining IRS communications. Calls are limited to five clients and 30 transcripts per call (increased from 10 transcripts on Nov. 15, 2021).

Press 4: If a client's account is in Automated Collection System status.

Press 5: For questions about an Automated Underreporter Notice that a client received. There is normally a phone number on the top right-hand corner of the Notice's front page.

If the...