Tom Purcell, chair of the Tax Executive Committee of the AICPA, told the IRS Oversight Board on Wednesday that the AICPA understands "that the increased fees were imposed as a result of an Office of Management and Budget directive for federal agencies to charge user fees reflecting the full costs of services." However, he said "the AICPA does not support the possible use of fee increases as a management tool by the [IRS] to control its workload burden."

The increased fees include private letter rulings, requests for changes in accounting method, corporate pre-filing agreements and Advance Pricing Agreements. The AICPA said it is concerned the fees will result in fewer taxpayers using these IRS programs. 

IRS budget. Purcell also asked the oversight board to support full funding of the IRS's 2007 budget, which Congress will soon deliberate. "Vibrant funding" is the key to IRS's success in fulfilling its customer service and enforcement responsibilities, he said. "Reductions in IRS funding requests that focus on customer service will only undercut efforts to improve compliance, and the nation's taxpayers will suffer as a direct result."

Notification of policy changes. Speaking about IRS's efforts to seek input from tax practitioners prior to announcing new initiatives or policy changes, Purcell said IRS has "generally done a very good job in recent years." A recent exception, he said, was the requirement in the 2005 Form 1040, Schedule D instructions requiring taxpayers to list all capital gains or loss transactions on Schedule D. In response to concerns expressed by the AICPA and other stakeholders about this burdensome reporting requirement, the IRS issued a clarifying statement.

E-filing. Additionally, Purcell praised the IRS's e-filing success during 2005 and pledged the AICPA to continuing to work closely with IRS to meet IRS's goal of 135 million individual e-filed returns during the 2006 filing season. However, he cautioned that the IRS must not leave behind taxpayers who can't afford or don't have access to computers and other new technologies, but said that instead the IRS must remain responsive to their needs.

Regarding implementation of the mandatory e-file program for large corporations and exempt organizations during the current filing system, Purcell noted to the board that it is important the IRS "remain mindful of the difficult experience" that taxpayers and the IRS had with the mandatory large partnership e-file program when it was rolled-out several years ago. He said the IRS should expect significant implementation issues with large corporations and exempt organization e-filings, and should maintain flexibility on granting hardship waivers.

"Our members remain concerned about a number of implementation issues such as the potential for security breaches, the ability of the IRS's computer systems to handle peak load demands by taxpayers, and the adoption of reasonable approaches by the agency in terms of defining what constitutes a timely filed return and valid elections," Purcell said.

The AICPA represents 350,000 members.