06 / 18 / 12

IRS Commissioner Proposes Real-Time Filing System

On Dec. 8 2011-- Internal Revenue Service Commissioner Douglas Shulman proposed a filing system that would enable the agency to collect various documents such as 1099s and W-2s before taxpayers file their full returns.

Douglas Shulman explained at a public meeting in Washington that by collecting documents earlier, the IRS would be allowed to reject returns that didn't match records before processing, which would reduce burdens on both the agency and the filers involved.

Shulman said that "a real-time system would significantly improve compliance."

With more advanced computers and operations, the agency has been allowed to make fundamental alterations to the way taxes are filed. In the upcoming filing season, the IRS expects to process all returns on a 24 hour basis instead of a weekly one.

Shulman argues that the IRS needs to speed up the process to a real-time system because consumers nowadays are demanding instant gratification.

Currently, the IRS functions by using a system of evaluating a tax return and then supporting documents only after the return has been filed. If IRS personnel investigate a return, a tax filer must recover all past records subject to possible taxation.

Shulman said that by allowing taxpayers to reference information against the returns data reported to the IRS by income sources, the IRS could avoid unnecessary complications.

Cost savings may be Shulman's most appealing argument towards making changes in the taxation system, though he did not mention the budget. The IRS is faced with a budget cut by Congress and therefore must be cautious of where they spend their funds.

When Shulman spoke in April he explained that there would be exponential long term benefits to a real time system and that billions in net revenue and cost savings would result from such a change. The savings would be shared amongst both the government and the tax filers.

When asked about the changes of law by Congress and the financial situation at hand, Shulman replied that it would be awhile before the IRS could institute a real-time system.

***Bryson Law Firm, LLC is a Louisiana law firm focusing 100% of our practice on helping people and businesses solve their IRS and Louisiana state tax problems. We have offices in Lafayette, Baton Rouge, and Shreveport.