Tax News Updates

The Inflation Reduction Act of 2022 required the IRS to provide Congress with a report on the feasibility of running a direct filing system. In the report, which the agency submitted on May 16, the IRS said many taxpayers are interested in a direct file system, and the agency is capable of executing it. Therefore, the IRS is taking the necessary steps to begin a direct file pilot program for the 2024 filing season so it can assess the customer support and technology necessary to fully implement direct file for all taxpayers.

The IRS will also use the pilot program to determine whether the agency could overcome the potential operational challenges. However, it did note that effectively implementing direct file would require a sustained budget investment and careful management of the program's operational complexity.

The report relied on information the IRS collected through its Taxpayer Experience Survey as well as an independently conducted survey of taxpayers. The IRS plans to supplement that information with user research and usability testing conducted using an internal prototype that will allow the agency to better understand the user's perspective.

IRS officials say the agency is resuming its collection efforts and is expected to issue CP14 notices, Notice of Tax Due and Demand for Payment, to roughly 8 million taxpayers by the end of May. The IRS temporarily stopped collections activities during the COVID-19 pandemic.

Eric Green, a tax attorney who regularly serves as an instructor for NATP webinars on collections issues, said he learned of the IRS's intention to resume issuing the balance due notices during a recent meeting with officials from the agency. “We have been waiting for the tidal wave of IRS rep work to start, and it seems things will be gearing up around Memorial Day,” he said.

Additionally, IRS officials noted the following:

• The IRS has caught up with its mail processing backlog, so there is no longer a concern that the agency is sending notices out to taxpayers who have responded or made payments that had not been opened.
• Taxpayers who owed balances and were due for enforcement action before the pause will probably receive a refresh notice to remind them of the balance due in the hopes that they or their representative will contact the IRS to work out an arrangement before action is taken on a levy.

Enforcement notices will be sent out in waves to avoid overwhelming the IRS's collection phone lines, Office of Appeals and Taxpayer Advocate when taxpayers receive their notices and try to contact the agency.