As the IRS’s new top administrator, Charles Rettig will focus on maintaining and building ties with practitioners, he told CPAs at the AICPA National Tax Conference in Washington on Tuesday.
After all, until Rettig’s swearing-in as the Service’s 49th commissioner on Oct. 1, he was for 36 years a tax lawyer himself, he noted. In private practice with the Los Angeles area law firm Hochman, Salkin, Rettig, Toscher & Perez PC, he specialized in representing clients in tax controversies. He has also been an officer in the American Bar Association’s Section of Taxation and the American College of Tax Counsel, as well as chairing the IRS Advisory Council.
Rettig said he was moved emotionally by the standing ovation many in the gathering of about 700 people gave him upon entering the meeting hall, his first public-speaking engagement as commissioner. Although he referred to a prepared script, his remarks were mostly off the cuff and from personal reflection.
“I consider the tax practitioner community to be a family,” he said, a family that also includes IRS employees, whom he said he has been busy meeting by conference call and one-on-one.
Several times, Rettig mentioned taxpayer compliance and enforcement as a priority, but with a sensitivity, he said, for taxpayers, especially the “most vulnerable,” whose particular compliance and service needs he has witnessed firsthand.
“When I used to get called on to speak, I’d say we’re all in the same business, whether you’re with the government or private practice in the tax world, to get people back into compliance,” he said.
Instilling pride within the IRS for its employees’ hard work and ingenuity in overcoming “a really difficult process for a long time” is a chief aim, Rettig said. “We don’t have the tools we need,” such as the customer service options available to consumers of electronic products, he said.
He also pledged transparency within the IRS, with more publication of internal training materials.
“Where we can be more transparent than you can imagine, we will,” Rettig said.
Practitioners and taxpayers can also expect more informal guidance as the IRS continues to implement the changes from the legislation known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, he said.
Referring briefly to his prepared remarks, he ticked off other priorities: systems modernization, staffing, the IRS’s budget, taxpayer assistance, and enforcement.
And he related a few outside-the-box plans, such as one he voiced to a law partner before his confirmation as commissioner.
“I said I want to go to a [criminal tax defendant] sentencing. The partner said, ‘No commissioner has ever gone to a sentencing of a tax defendant, ever.’” Undeterred, Rettig told him, “I want to spend a few moments to talk to the judge and let them know the importance of people going to prison for tax crimes.”
One area the IRS will be taking a hard line on is tax evasion using cryptocurrency, he indicated, in which the volume of transactions is obvious, and a Justice Department “John Doe” summons has been yielding taxpayer information.
“You think the IRS doesn’t know?” he said. “The IRS will have more information about them than you can possibly imagine.”
But he also spoke approvingly of IRS Commissioner Mortimer Caplin’s directive from the 1960s that the Service should approach taxpayer controversies impartially, from the point of view of neither the government nor the taxpayer.
Rettig spoke about filling the many and growing vacancies within the IRS.
“We are hiring, but it takes a while to get hired by the IRS,” he said. “It can take as long as eight or nine months. Unless you come up here today,” he joked.
After all, he said, he has made the transition from tax practice to government service, and as a commissioner, he will maintain a tax practitioner’s eye on running the IRS.
“I’m not going to lose my tax edge,” he said.
The national taxpayer advocate
Earlier Tuesday, the conference also heard from National Taxpayer Advocate Nina Olson about particular taxpayer quandaries and needs. She discussed the breadth of types of taxpayers needing help from the Taxpayer Advocate Service (TAS) — ranging from large multinational corporations trying to comply with the transition tax under the TCJA’s new Sec. 965 on the one hand, to, on the other, Amish people, who refuse to obtain Social Security numbers on religious grounds. Olson also discussed verification problems of taxpayers applying for individual taxpayer identification numbers (ITINs).
She also described problems with the IRS’s Pre-Refund Wage Verification Program last tax filing season that matched — or in sizable numbers falsely detected a mismatch between — returns and Forms W-2, Wage and Tax Statement. The mismatches led to a 230% increase in pleas to TAS for help obtaining refunds by taxpayers whose returns were flagged as “questionable,” with the result that refunds were delayed until as late as July this year.
One partial solution she has advocated is to process those returns daily rather than weekly for matching to updated employer copies of the W-2s, she said.
The snafu illustrates her misgivings about the IRS’s stated goal of a “future state” that will increasingly rely on automated processes and online interaction with taxpayers. The present state of the IRS’s antiquated core data processing systems she likened to a Rube Goldberg contraption, referring to a series of comical illustrations of extravagantly makeshift devices to perform simple chores popular in the early 20th century.
“That really creates risk in the system,” Olson said.
— Paul Bonner (Paul.Bonner@aicpa-cima.com) is a Tax Adviser senior editor.