The IRS is hoping to implement a new real-time tax system (RTTS) they believe, according to IRS Commissioner Doug Shulman, will help improve the tax filing process in such a way that it will not only reduce burden for taxpayers but improve overall compliance as well. And though this new system will require a series of long-term changes, the IRS is currently welcoming feedback they believe will help make the new system a success.
Currently, the IRS follows a “look back” model of compliance. With this method, the IRS compares third-party information it receives with that submitted on a tax return, often after the return has already been accepted. And because of this “look back” process, it’s not uncommon for a taxpayer to receive a notice of discrepancy from the IRS 12 to 18 months after their return has been filed and accepted. This after-the-fact compliance approach creates frustration for both taxpayers and the IRS. A new RTTS, however, will allow the IRS to match records upfront, when a return is originally filed, and therefore provide taxpayers the opportunity to correct the tax return so that it matches IRS records before it’s accepted.
In order to provide a medium for stakeholders such as consumer groups, software developers, government representatives, and many others to provide comments and insight about a new RTTS, the IRS is hosting a series of public meetings. The first meeting was held on December 8, with a second meeting planned for early next year. Specifics about the date, time, and location for the next meeting will be available at www.IRS.gov once details are finalized.