Report: IRS Needs to Improve FAQs, Access to ACA Guidance

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By Michael Trimarchi

Improving Affordable Care Act reporting procedures, protecting data and preventing identity fraud were among the top proposals in an Oct. 28 report by the Information Reporting Program Advisory Committee.

IRPAC, a federal advisory committee, said in its annual report to the Internal Revenue Service that information reporting continues to grow, especially with the requirements of the Affordable Care Act. About 2.3 billion information and withholding documents, including transmittals, were expected to be filed for 2015, IRPAC said, adding that the amount is to increase in 2016.

The report identified four areas of broad concern:

•improving the IRS use of frequently asked questions and answers posted on its website;

•penalty relief related to information returns with mismatched taxpayer identification numbers;

•issuing a new version of Form W-9, Request for Taxpayer Identification Number and Certification, that incorporates clarifications posted only at the agency's website and

•improving the administration of the penalty abatement process for reasonable cause.

As it had done in its 2012, 2013 and 2014 reports, IRPAC called for a safe harbor for de minimis corrections to information returns and payee statements.

With the enactment of the ACA, the IRS has relied on the use of FAQs to provide guidance and examples for employers. Employers generally print hard copies to support positions taken should the content later be revised or deleted, IRPAC said. The IRS should create an archived, searchable database for past FAQs so that those relying on FAQs in filing information returns can later show the basis for their positions, the report said. Reasons for revisions and deletions also should be provided, it said.

Until legislation is enacted to expand the TIN-matching program to include filers of information returns, the IRS should provide special relief from incorrect-TIN penalties, the report said. The relief would be provided to filers of nonwage information return types for which current rules do not allow validating identification numbers in the TIN-matching program, it said.

Additionally, a box should be added to Form W-9 that may be checked to authorize the information return filer to validate the payee's name-TIN combination through the TIN-matching program.

To contact the reporter on this story: Michael Trimarchi in Washington at mtrimarchi@bna.com.

To contact the editor responsible for this story: Howard Perlman at hperlman@bna.com.