Tax season can be a stressful time for many hard-working Nevadans. Our tax code is complex, and taxpayers can wait months to receive their tax refunds. As a long-time certified public accountant in Reno, I have spent my career helping businesses and residents navigate our complicated tax code. That is why I am worried about proposals being debated in Washington, D.C., that would expand the authority and mandate of the Internal Revenue Service to automatically generate tax returns on behalf of all Americans. Although this proposal may seem like a way to streamline the tax collection process, it would overburden an already strained IRS and create a conflict of interest that would harm taxpayers.
The IRS serves an important role in our country. The federal government needs an agency that can effectively and efficiently collect revenue to fund social spending programs, national defense, and other critical government functions. The IRS getting its existing mandate right is and should always be the priority.
Adding more responsibilities to an already overstretched agency is inviting disaster. A recent report from the Treasury Department’s independent Taxpayer Advocate Service found that the IRS is woefully unprepared for the 2022 tax season. The agency warned taxpayers to expect, “one of the worst filing seasons.”
Under a government run tax preparation system, taxpayers will likely have to deal directly with the IRS to correct any mistakes or have any questions answered. A 2021 report from the Washington Post found that only 1 in 50 calls to the IRS help line was actually answered by a human representative. If one of my clients calls my office, or that of any CPA or tax professional, they know they will get a timely response.
On the other hand, as of December 2021, the IRS had yet to finish processing 6 million tax returns filed last season. This is especially concerning with the start of this tax season already underway.
Taxpayers will likely be forced to wait even longer to receive their well-deserved refunds. The same report from the Taxpayer Advocate Service found that tens of millions of taxpayers had to wait to receive their refund checks in 2021. This can cause real financial pain for families struggling to deal with rising inflation.
Proposals to create a government run tax preparation system present a clear conflict of interest. The IRS cannot be asked to collect revenue or audit taxpayers while simultaneously fighting for deductions and refunds for those same taxpayers. As a long-time CPA, I have experienced first-hand how many of my clients appreciate having an independent expert on their side when it comes to dealing with the IRS.
Whether it is a CPA or even a cheap private online tax preparation software, Americans want someone fighting for their financial interests. Our tax collection process should have a system of checks and balances.
U.S. Sens. Catherine Cortez Masto and Jacky Rosen, both Nevada Democrats, have always been pragmatic legislators who fight for sound policy. They know when a proposal is well-intentioned, but misguided. I urge both of our senators to work with their colleagues to reject any proposals that add additional burdens and responsibilities to an already overstretched IRS.
Mark Bailey is a certified public accountant and managing partner of the Reno-based financial consulting firm Excelsis Accounting Group.