Even if Congressional negotiators fail to break their fiscal 2011 federal budget impasse in time to avoid a potential government shutdown, Americans still will be responsible for filing their federal income tax returns by the April 18 deadline, the commissioner of the Internal Revenue Service said at a National Press Club luncheon on April 6.
"The most important thing I can communicate is: ‘File your tax return,'" IRS chief Douglas Shulman told the audience three days before much of the government could shutter.
Although IRS would not have not have a “full complement of operations” should a shutdown occur, Shulman said, “we will be accepting tax returns. Most returns are processed automatically and will not experience any delays.”
He warned, however, that a shutdown would cause delays in refunds to taxpayers filing paper returns.
In his formal remarks, Shulman – now In the third year of his five-year term as IRS chief – detailed his vision of agency reforms that would capitalize on technological advances in information and data to achieve “a fundamentally different way to run our tax system.”
Throughout its 149-year history, IRS has employed a “looking back” business model, basically processing returns and following up after returns are filed, according to Shulman.
But that model’s deficiency, he said, “is that it does not deal with taxpayer problems up front,” thus creating frustrations for both taxpayers and IRS.
Among other things, Shulman said he envisioned IRS getting information returns from third parties (W2 and 1099 forms, for example) before – not after --individual taxpers file their returns. This would enable the agency “to flag issues up front and avoid the ‘look back’ problem altogether,” he said.
In response to a question from the audience, Shulman said IRS’s job is to administer tax policy “in an honest and fair way” and is not involved in shaping tax policy.
Nevertheless, he urged simplification of the federal tax code – which, he noted, has undergone 3,500 changes since the year 2000. He said the agency is helping policymakers identify opportunities for simplification.
He also spoke of the agency’s efforts, notably through its recently announced Offshore Voluntary Disclosure initiative, to get people who hide assets offshore back into the tax system.
On another issue, Shulman said the agency takes “very seriously” potential breaching of sensitive information taxpayers disclose to IRS. Security, he said, “is complicated stuff. (But) we’re on top of it.”