New report highlights next updates you might see to IRS e-filing & more

The annual Purple Book from the National Taxpayer Advocate is here, and this year’s report contains several recommendations for the IRS to make changes that’ll impact your Payroll and Finance teams.

Many of the suggested updates deal with e-filing returns, making tax payments online and penalties. They could reduce red tape and save you big bucks.

Get ready: Here are some of the report’s key recommendations you may see the IRS implement soon.

Report: Change IRS deadlines

Right now, employers that submit tax returns and payments online are subject to stricter deadlines than those who file and pay through the mail.

Federal law allows the IRS to count payments and returns as timely if they’re postmarked before the deadline. But there’s no similar provision for online submissions, the report said.

In fact, employers must schedule any payments submitted online via the agency’s Electronic Federal Tax Payment System (EFTPS) by 8 p.m. EST the day before the due date to meet the deadline.

Meanwhile, as long as a mailed payment is postmarked on the due date, it’s considered timely. This is the case even though the IRS would process the EFTPS payment more quickly than a mailed check.

To prevent this, the report suggests the IRS should apply the same rules and deadlines to electronic submissions that it does to those that are mailed.

This would give more leeway to employers when submitting returns and payments online. It would also make it easier to avoid penalties for late payments and filing.

Delinquent notices & penalty approval

The Purple Book also recommends that the IRS start sending taxpayers notices about delinquent payments more frequently.

Current law only requires the IRS to send one notice about missed payments a year. But that can cause a payment to fall through the cracks – especially if it’s missed accidentally. That can create costly hassles for employers. Not only will they be subject to penalties, they may also have to pay legal fees to straighten out the mess.

The best way to prevent this situation, the report said, is for the agency to start sending notices about unpaid taxes on a quarterly basis.

In addition, the report asks the IRS to provide clarity on the rule that a supervisor must approve any penalties assessed against a taxpayer in writing.