On November 18, 2020 we noted reports of the IRS Commissioner’s statement that more COVID-related penalty relief was “not going to happen” when speaking to the AICPA National Conference on Federal Taxes, as well as the reaction from the AICPA’s Chief Tax Officer Ed Karl, stating rather pointed disagreement with this decision.[1]

Now the AICPA, along with six other tax groups, has issued a new letter again requesting relief, this time addressed to both Commissioner Rettig and Treasury Assistant Secretary (Tax Policy) (and former interim Commissioner) David Kautter.[2] In addition to the AICPA, which had previously written a letter to which Commissioner Rettig was responding to at the conference, the following groups signed onto this letter:

alliantgroup, LP
National Association of Enrolled Agents (NAEA)
National Association of Tax Professionals (NATP)
National Conference of CPA Practitioners (NCCPAP)
National Society of Tax Professionals (NSTP) and
Padgett Business Services.

The letter begins by describing the problems, and pointedly notes that the IRS, through botched notices, has contributed to the problems facing taxpayers and tax professionals:

The Coronavirus Disease 2019 pandemic (commonly known as “Coronavirus”) has created unique challenges for the Internal Revenue Service (IRS), taxpayers and tax professionals alike. The organizations signed onto this letter are in a distinctive position to understand those challenges. The reality is that for many Americans, the global pandemic has created obstacles preventing many taxpayers and their advisors from timely filing returns or making timely payments despite their best efforts. Additionally, the IRS sent mistargeted notices resulting from their inability to process some timely filed returns and timely paid taxes. Indeed, the current state of the IRS, including a reduced workforce, mail backlog, and premature compliance actions call attention to the situation.[3]

The short, two-page letter, then continues to request the following relief:

A concerted effort to address these problems is needed as we are all, unfortunately, facing illness, death, economic hardships or other Coronavirus related tests. We, therefore, ask the IRS and the Department of the Treasury to:

Provide targeted penalty relief through the creation of an expedited and streamlined reasonable cause penalty abatement process to taxpayers affected by the Coronavirus pandemic that eliminates the need for written requests;
Develop specific Coronavirus examples, for impacts on both taxpayers and tax professionals, where the taxpayer can self-certify that they qualify for reasonable cause abatement and share these examples with all telephone assistors through interim guidance; and
Develop a dedicated telephone number, or dedicated prompt, for taxpayers or their advisors to call to request Coronavirus-related penalty relief.[4]

In a footnote, the authors of the letter suggest that a self-certification program of the type requested in the second bullet could be modeled on the late IRA rollover relief self-certification program the IRS established in Revenue Procedure 2016-47.[5]

Given the Commissioner’s previous rejection out of hand of such relief, it’s not clear that this letter will change his mind. But it does put the issue on the record, as well as moving pressure up the line into Treasury itself.

[1] Ed Zollars, “IRS Commissioner Rejects AICPA Call For COVID-19 Relief on Late-Payment and Late-Filing Penalties,” Current Federal Tax Developments website, November 18, 2020 (https://www.currentfederaltaxdevelopments.com/blog/2020/11/18/irs-commissioner-rejects-aicpa-call-for-covid-19-relief-on-late-payment-and-late-filing-penalties retrieved December 8, 2020)

[2] December 7, 2020 Letter from the alliantgroup, LP, AICPA, NAEA, NATP, NCCPAP, NSTP and Padgett Business Services, December 7, 2020

[3] December 7, 2020 Letter from the alliantgroup, LP, AICPA, NAEA, NATP, NCCPAP, NSTP and Padgett Business Services, December 7, 2020

[4] December 7, 2020 Letter from the alliantgroup, LP, AICPA, NAEA, NATP, NCCPAP, NSTP and Padgett Business Services, December 7, 2020

[5] December 7, 2020 Letter from the alliantgroup, LP, AICPA, NAEA, NATP, NCCPAP, NSTP and Padgett Business Services, December 7, 2020. See our article on Revenue Procedure 2016-47 at “IRS Provides for Automatic Qualified Plan/IRA Late Rollover Relief,” Current Federal Tax Developments website, August 24, 2016 (https://www.currentfederaltaxdevelopments.com/blog/2016/8/24/irs-provides-for-automatic-qualified-planira-late-rollover-relief retrieved December 8, 2020)