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Making matters more difficult: The IRS is behind in dealing with responses to its own letters as well. "The IRS sends you a notice about an issue on your tax return, you respond, and they send a letter saying they will respond in 45 days," says Jeffrey Porter, chairman of the American Institute of Certified Public Accountants' tax executive committee.
All well and good. But at the same time, the IRS computers are spitting out letters threatening to place levies on your accounts, which you also have to respond to. "It gets to be this mad cycle that gets very challenging," Porter says. And for preparers like Porter, time on hold really isn't billable -- it's just a waste of time.
What's more, the U.S. tax code gets more complicated each year. "More complexity, less service, less help -- it seems like a prescription for disaster," Porter says. So far this year, the IRS has delayed putting out forms for residential energy credits, passive activity loss limitations, qualified adoption expenses and others -- all of which means delayed refunds for taxpayers.
To make matters worse, the IRS uses 22 different information systems that don't talk to each other, Jenkins says. Congress has not given the IRS the money it needs to update and modernize its systems, some of which still use the now-antique DOS system.
Making the tax process more onerous isn't good for anyone, except those who get paid to do other peoples' taxes. And it's particularly bad for taxpayers. Currently, the IRS collects $255 for every $1 it receives in its budget. "If the Chief Executive Officer of a Fortune 500 company were told that each dollar allocated to his company's Accounts Receivable Department would generate multiple dollars in return," the Taxpayer Advocate's report says, "it is difficult to see how the CEO would keep his job if he chose not to provide the department with the funding it needed. Yet that is essentially what has been happening with respect to IRS funding for years." (continued...)
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