In case you missed it during the holiday rush and festivities, President Trump passed the Tax Cuts & Jobs Act (TCJA), making it the largest overhaul of tax code in 30 years.
Now the question is, can Americas least favorite agency, the IRS, really handle this change?
The new law has already bombarded the IRS with a new workload – from studying and learning the new law, training its employees in the new system and updating its software, to answering the explosion of phone calls from tax payers hoping for guidance.
Funding for the IRS has fallen by about 20 percent since 2010. Before the TCJA was passed, the IRS was expected to be able to answer only 60 percent of the routed calls from the 100 million calls it receives from tax payers.
Some tax payers last year were placed on hold for as much as an hour and a half! This burden is expected to increase greatly under the new law. Since 2014, the IRS has stopped answering anything beyond “basic” questions during the filing season, and the phone calls aren’t going anywhere.
One of the biggest issues the IRS has besides funding is the workforce they have been provided. The last major change we had in tax code was in 1986, when the tax overhaul signed by President Ronald Reagan led the IRS to hire an additional 1,300 staff members. This caused an increase in the number of phone calls answered by 30 percent, and so far there has been no work on hiring additional staff or acquiring more funding.
The IRS will have to figure out how to interpret and implement the hundreds of pages of change to the tax code that were just passed, at a time when its already struggling with budget cuts and staff reductions.
The change, specifically the programming of the new tax system, sounds easy in today’s tech era but former IRS Commissioner John Koskinen says, even simple changes are complex thanks to the Kennedy-era computer programs that the agency uses. “A lot of our forms are hard-coded, so you don’t just enter a little thing in your computer, you actually have to go into the code and change the date or change the forms,” he stated.
For now, we’ll have to wait for the IRS to train and educate all the tax professionals and interpret the law so that it can be implemented and complied with.
Good luck for now and don’t forget to reach out to our staff at SoCo for questions and concerns!