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NPRC Testimony on Proposed IRS Real Time Tax System

January, 2012

The NPRC was invited to participate in the second public hearing on this topic. IRS Commissioner Shulman and Deputy Commissioners Tucker and Miller discussed the IRS vision for an improved U.S. tax system, in which third party information reports such as Forms W-2 and 1099 would be on file with the IRS prior to the tax season. This would enable dramatic improvements in terms of efficiency, accuracy and reduced taxpayer burden. Taxpayers would be able to correct their returns before the IRS processed them, rather than months or years after. This initiative would also effectively address tax refund fraud.

During the hearing, NPRC presented a preliminary discussion of alternatives to achieve the RTTS vision, which generally fall into one of the following categories:

• Earlier annual reporting deadlines
• Preliminary and final/corrected submissions
• Expansion of the special rule for recognition of non-cash fringe benefits
• More frequent (i.e., quarterly) W-2 reporting
• Reporting to the IRS directly
• Expanded electronic filing of information returns

NPRC appreciates such opportunities to work with the IRS and state tax authorities to improve tax administration.