Bonds

The specialized nature of the Internal Revenue Service’s Tax Exempt Bond program may help it go largely unchanged during the agency’s wider restructuring efforts.

“We don’t know what the restructuring is going to be but since taxes and bonds are a specialty area, my belief is that they’re going to keep TEB intact,” said Bob Griffo, technical advisor to the director of government entities at the TEB office.

“Since TEB is a specialty area, I don’t think it’s going to have a big impact on our program as far as taxpayers are concerned,” he added. “There will still be experts in tax-exempt bonds who will be conducting the examinations as such.”

The IRS restructuring is part of the wider Taxpayer First Act, which was signed into law in July 2019 and set out a framework that “will fundamentally change the way we operate, building upon our strengths, with additional focus on areas to improve the important service we provide to our great country,” IRS Commissioner Chuck Rettig said.

The agency was then required by law to submit recommendations to Congress as part of a formal Taxpayer First Act report, laying out three sets of recommendations, including a taxpayer experience strategy that would create a closer synthesis between the taxpayer and the tax professional community, a comprehensive training strategy, as well as a recommended organizational design upgrade.

The last such overhaul the agency received was part of The Internal Revenue Service Restructuring and Reform Act of 1998.

But despite Griffo’s speculation that the TEB office will not undergo massive organizational shifts as part of this, some smaller changes to TEB forms are already being recognized.

“Some people have already realized that forms and publications have changed all of the basic TEB forms,” Griffo said. “The forms 8038, 8038(G), 8038(G)(C), 8038(T) are now on the IRS website, new forms and new instructions, but there are no substantive changes.”

TEB did not participate in changing the forms as they were done to comply with the requirements of the Office of Management and Budget, Griffo said.

“A couple of years back, determination was made that instead of having [Office of Management and Budget] control numbers for each individual form, that they would be grouped into buckets,” Griffo said. “So now there is a new OMB control number.”

These slightly updated forms were supposed to come out Oct. 17, but were uploaded to the TEB site early as agency staff finished them off ahead of schedule.

“People who have already had their clients sign the forms do not need to have them resign using the new form. You can file the form as is and it won’t affect the processing of the form,” Griffo said.

Form 8038(r) has yet to be uploaded to the IRS website but will be available in the next few days and Form 8703 will also be updated with a different control number, which is due out in December.

The updated Form 8703 also contains a small substantive change, where the email address for further questions has been removed, as the address has been unattended for years and already directs those with questions to call customer service.

Form 8038(c)(p), which is due out at the end of December for use in early January, also includes small substantive changes, in which a draft of the form is already out on the IRS website and draft instructions are due out next week, Griffo said.

“Unlike the other forms, there are substantive changes to this and if people do not use the current form in January when they file for their payments for the refundable tax credits or direct pay bonds, there could be delays in processing the payments to them,” he added.

But all together, these do not represent major changes to the TEB’s normal forms and processes, despite the TEB wanting to do more with the comments and suggestions it’s received in recent years.

“There hasn’t been any updates of languages because there was no need to change the forms or the instructions,” Griffo said.

“There were no substantive changes and unfortunately we did not have enough time to go deeper into the forms instructions and incorporate some suggestions that came out from the NABL comments that we received over a year ago.”

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