Big Tax Refunds May Come Faster Under Streamlined IRS Procedures

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By Alison Bennett

Refunds of $2 million or more could reach taxpayers more quickly under new, streamlined IRS procedures designed to include more officials earlier in agency discussions.

That effort is needed to speed up big refunds that may get stuck at the Internal Revenue Service after the Joint Committee on Taxation does a mandatory review, some tax attorneys told Bloomberg BNA. IRS efforts to fix JCT concerns sometimes can take “an inordinate amount of time,” said Daniel A. Rosen, a partner at Baker & McKenzie LLP.

Practitioners said they welcome the relief. The new procedures, issued in an Aug. 14 memorandum, are intended to speed things up in cases where the JCT raises issues or concerns. The document is designed to head off delays caused by many separate discussions, allowing IRS Appeals executives to work with an attorney-adviser and chief counsel or deputy chief counsel at the beginning of the talks.

For the IRS, “I think the most important thing is an acknowledgment that the process can take too long,” said Paul M. Schmidt, a partner and tax chair at Baker & Hostetler LLP. “It’s certainly hopeful and useful to acknowledge that. It’s really positive,” said Schmidt, who has previously served as the JCT’s legislative counsel.

JCT Reviews Win Praise

Big money is at stake, with a special group of JCT officials on-site at the IRS to do the reviews.

The group has to look at all refunds of $2 million or more, with the exception of companies where both the owners and the shareholders are taxed on their income, known as subchapter C corporations. That limit for review is $5 million.

Schmidt and other practitioners said the refunds generally move through the JCT scrutiny fairly quickly and efficiently, and the IRS is apparently where they can get bogged down.

Rosen said the IRS generally won’t issue a refund until it resolves any objections raised by the JCT, although technically, it doesn’t have to wait that long. Under the current tax code, Rosen said, the IRS only has to submit a report to the JCT and wait 30 days before granting the refund to the taxpayer.

Hope for Improvement

Practitioners said they’re on the lookout for improvement.

“I think the IRS deserves credit for attempting to streamline the process in a way that helps taxpayers waiting for refunds without compromising the quality of the IRS’s responses to JCT inquiries,” said Robert J. Kovacev, a partner at Steptoe & Johnson LLP.

“Time will tell whether the procedures will produce a tangible benefit in practice,” he added.

Rosen said he is “hopeful that the new procedures will expedite the IRS’s responses to JCT’s questions and concerns.”

Schmidt said, “We’ll be interested to see if those changes will change things in practice. The bottleneck of the IRS response can be a source of frustration.”

The IRS didn’t return requests for comment.

To contact the reporter on this story: Alison Bennett in Washington at

To contact the editor responsible for this story: Meg Shreve at

For More Information

Text of the memorandum is at

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