Questions and more questions…. My blog this month will cover several items in the news of late.

First, the IRS really wants to hire additional staff. In recent years, the IRS has been forced to implement both a hiring freeze and a stoppage of most overtime pay in order to absorb significant cuts to their budget. The reasons they want (and need) to start hiring again are several:

• Additional staff is needed to implement the Affordable Care Act. This covers everything from ensuring taxpayers understand the new law to dealing with noncompliance issues. It also includes being able to handle taxpayers who received subsidies under the Act last year and now may have to return some of the money because their income has increased.
• According to the IRS commissioner, John Koskinen, in a recent speech to the National Press Club, over half of the current IRS workforce is age 50 or older. In fact, by next year, 25% of their workforce will be eligible to retire and in four years, approximately 40% of their employees will be eligible. In addition, less than 30% of their current employees are under the age of 30 (and this number is steadily declining), with about half of these working only part time. Koskinen jokingly stated that since so many of their top level executives (roughly 46%) have left in the past several years, a sign could be hung at the entrance reading “Under New Management.” As highly skilled workers retire, the IRS needs to replace them with the next generation of workers but the benefits of working for the IRS may not be an easy sell to this age group.
• The IRS currently has outdated technology and code (with the upside, per Mr. Koskinen, of hackers being hampered by having to figure out just how the system works).

During his speech, Mr. Koskinen mentioned it is time to do something about the complexity of the tax code. However, he suggested nothing as radical as two Congressmen (Rob Woodall <R-Ga.> and Robert Goodlatte <R-Va.>) recently did in a report accompanying the annual budget resolution: they made the suggestion to completely get rid of the tax code and start all over again. No specific alternatives were suggested. And, while a budget resolution isn’t binding, it does express the majority party’s opinion.

And finally, as to who does not want to require the use of the accrual method of accounting for personal service organizations (with emphasis on law firms), that would be the American Bar Association. Apparently there have been several proposals to do just that, with the most recent being a discussion draft prepared by the Senate Finance Committee containing this suggestion for taxpayers with annual gross receipts over $10 million. According to the ABA, in a recent letter sent to several key lawmakers, this would create a particularly heavy burden to law firms which typically are not paid by their clients until long after their work has been completed. I found it interesting that the letter also puts forth the argument of having to pay taxes on income that not only has not yet been received but income that may never be received. To me, it almost sounds like they are saying it is more common for lawyers to be in this dilemma than other professionals. That suggests even more questions, but enough of those for now!