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Tax professionals are “terrified” of the IRS’s decision to destroy 30 million files

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An audit by the Inspector General of the Treasury for the Tax Administration revealed that the IRS has leaked data on millions of payers, sparking the anger of the tax community.

The material known as paper information in the accounting language is submitted annually by employers and financial institutions, and includes taxable activities, such as W-2 forms, with copies sent to taxpayers and the IRS.

“The inability to process paper document delays led to the management’s decision to destroy about 30 million documents filed on paper in March 2021,” according to the report.

The IRS delay, budget cuts for years, staff shortages, pandemic-related office closures and additional duties are expected to clear up by December, according to Commissioner Charles Rettig.

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Although the report does not specify what information the agency returns, the news has provoked angry responses among tax professionals, especially after another difficult period of submission.

“I was horrified when I read a report describing the destruction of information disclosures on paper,” said Phyllis Jo Kubey, a New York-based certified financial planner and president of the New York State Association of Registered Agents.

CNBC contacted the IRS for comment.

Returning the information could result in a “mismatch” in the IRS, delaying the refunds because the agency cannot verify the details of a taxpayer’s tax returns, he explained.

Although the effects of the decision are unknown, tax professionals have long complained about the IRS’s automated notification feed, with limited access to the agency.

“If they don’t fit into the system, there will be disagreements, which means potential notifications are being sent,” Dan Herron told San Luis Obispo, California’s CFP and CPA Elemental Wealth Advisors.

Although the IRS stopped more than a dozen types of automated notes in February, Herron says ongoing correspondence still causes headaches for taxpayers and advisers.
Brian Streig, a CPA at Calhoun, Thomson and Matza LLP in Austin, Texas, said the news was “a breach of our trust,” indicating the burden on the business community.

“Small businesses are struggling in January to prepare and accurately submit these information returns in a timely manner,” he said. “It’s like seeing the IRS just destroy these. It’s like accepting that the IRS doesn’t really care.”

Larry Harris, CFP and Parsec Financial’s director of tax services at Asheville, North Carolina, expressed similar concerns, questioning his ability to continue compliance with the agency.

“It further undermines the IRS’s reputation in the business community and in the public eye,” he added.

Tax professionals are “terrified” of the IRS’s decision to destroy 30 million files

Source link Tax professionals are “terrified” of the IRS’s decision to destroy 30 million files

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