In an effort to reduce the amount of improper claims and other tax benefit errors, the IRS is being advised to test and assess the viability of videoconferencing to educate tax preparers and conduct reviews to ensure they’re complying with tax laws.
According to a report by the Government Accountability Office, “knock and talk visits” focused on education and conducted in person, and due diligence visits focused on compliance and done in person or by telephone, steeply declined due to the pandemic. The IRS conducts the visits as part of the its Refundable Credits Return Preparer Strategy.
The report recommends testing the use of video conferencing to compensate for reduced visits and compliance reviews in 2021 and 2022 due to COVID-19. If the IRS finds the benefits outweigh the costs, the GAO proposes the implementation of video conferencing as a means to expand tax preparer education and compliance visits.
“Without plans to test videoconferencing visits with preparers, IRS will remain limited in its efforts to address preparer noncompliance,” said the GAO report. “It may also miss opportunities to innovate its compliance actions and align with agency-wide efforts to expand digital services to taxpayers and professionals.”
In fiscal year 2021, 23% of payments made by the IRS to taxpayers filing for refundable tax credits were done in error, costing the agency approximately $26 billion, according to the IRS.
The GAO reports that nearly half of taxpayers claiming refundable tax credit benefits through programs like the Earned Income Tax Credit, the American Opportunity Tax Credit and the Additional Child Tax Credit do so through paid, professional tax preparers, many of whom improperly file due to a lack of education or noncompliance with refundable-credit regulations.
Although the Refundable Credits Return Preparer Strategy tests new compliance and knowledge training processes annually, the IRS hasn’t tried videoconferencing as a method of conducting preparer visits and has questions about the potential challenges involved, according to Accounting Today.
The GAO hopes that virtual visits present an opportunity for the IRS to embrace modern technology while providing a cost-effective, flexible option for conducting preparer visits.
“Without plans to test videoconferencing visits with preparers, IRS will remain limited in its efforts to address preparer noncompliance,” the report stated. “It may also miss opportunities to innovate its compliance actions and align with agency-wide efforts to expand digital services to taxpayers and professionals.”
More From GOBankingRates