The Trump administration’s fiscal year 2019 budget proposal includes increasing oversight of paid tax preparers along with more authority for the Internal Revenue Service.
The budget proposes $11.1 billion in base funding for the IRS, including $2.3 billion for running key tax filing and compliance IT applications and $110 million for IT modernization efforts. The budget also requests additional funds for new and continuing investments to expand and strengthen the enforcement of the tax laws.
“Taxpayers are increasingly turning to paid tax return preparers to assist them in meeting their tax filing obligations,” said the budget document. “Ensuring that these preparers understand the tax code would help taxpayers get higher quality service and prevent unscrupulous tax preparers from exploiting the system and vulnerable taxpayers.”
During the Obama administration, the budget proposals also routinely called for greater regulation of tax preparers. The IRS rolled out a Registered Tax Return Preparer program in 2012 that would require tax preparers to undergo continuing education and testing to be registered. However, a federal court ruled in 2013 in the case of Loving v. IRS that the RTRP program exceeded the IRS's statutory authority, and a federal appeals court upheld the ruling in 2014. In response, the IRS introduced a voluntary education and testing program known as the Annual Filing Season Program later that year. The Trump proposal does not seem to be as detailed in terms of regulating tax preparers, however, as the Obama administration's efforts. In general the current administration has pushed in the direction of deregulation, rolling back enforcement efforts at agencies such as the Consumer Financial Protection Bureau.
The budget blueprint also asks for funds to modernize the antiquated computer systems at the IRS, some of which date back to the Kennedy administration. It also would provide funding for implementing the Tax Cuts and Jobs Act, the far-reaching tax overhaul that Congress passed last December.
It also would provide the IRS with the authority to correct more errors on tax returns before tax refunds are issued to prevent refunds from being sent to taxpayers who aren’t eligible, similar to math error authority. The budget would “allow the IRS to resolve simple issues quickly without having to direct enforcement efforts away from more difficult cases.”
Another change would involve requiring a valid Social Security Number for work in order to claim the Child Tax Credit and the Earned Income Tax Credit to “ensure that only individuals authorized to work in the United States could claim these credits.” Currently taxpayers can use Individual Taxpayer Identification Numbers, or ITINs, to file tax returns and claim dependents if they don’t have a Social Security Number. Many undocumented immigrants use ITINs to file taxes, and the budget proposal reflects the Trump administration’s stance on immigration.
Last week, the Trump administration announced it is nominating a new IRS commissioner, Charles Rettig, a California tax attorney who is a partner at the Beverly Hills-based law firm Hochman, Salkin, Rettig, Toscher & Perez (see Trump to nominate Beverly Hills tax lawyer Rettig for IRS chief). The acting commissioner is currently David Kautter, who is also Assistant Secretary of the Treasury for Tax Policy, but Rettig would succeed John Koskinen, whose term ended last November.