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IRS Trials New Electronic Dispute Resolution System

by Mike Godfrey, Tax-News.com, Washington

03 December 2003


The Internal Revenue Service is currently testing an internet-based electronic dispute resolution system that promises to dramatically reduce the time and costs involved in the settling of taxpayer disputes.

The new system, known as Electronic Account Resolution, is currently being trialled with a small number of tax professionals, and allows preparers to access a client’s records after being furnished with a completed power of attorney form from the taxpayer. The preparer can then log on to an IRS database via a secure internet connection to access the records in question.

When fully operational, lawyers, accountants and enrolled agents will be authorized to use the system, although individual taxpayers will not be granted access. It will replace the current paper-based system whereby tax professionals must prove to the IRS that they have the power of attorney to act before the IRS will begin to supply the relevant information; the process can often take days to complete.

"Typically, getting a transcript took 5 to 10 days when ordered through the mail," said James Leimbach, an enrolled agent from Florida, according to the New York Times. "With the new system, I will be able to pull transcripts up electronically."

However, in its initial stages, the Electronic Account Resolution system will only be geared up to solve simple tax return problems such as tracing payments or tracking refunds. Work has yet to commence on a system to tackle more complex problems such as proposing to settle a tax debt for less than the full amount.

In the initial stages access will be restricted to tax preparers who file more than 100 returns per year.


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