Nina Olson, National Taxpayer Advocate, addresses Congress with her 2018 Annual Report
According to Mary Beth Lougen, President of American Expat Tax Service, there are a number of key points in the Annual Report that impact taxpayers. For instance, in one section of Ms. Olson's report she outlined the "Most Serious Problems Encountered by Taxpayers". They include…
Most Serious Problems Encountered by Taxpayers
1. TAX LAW QUESTIONS: The IRS's Failure to Answer the Right Tax Law Questions at the Right Time Harms Taxpayers, Erodes Taxpayer Rights, and Undermines Confidence in the IRS
2. TRANSPARENCY OF THE OFFICE OF CHIEF COUNSEL: Counsel Is Keeping More of Its Analysis Secret, Just When Taxpayers Need Guidance More than Ever
3. NAVIGATING THE IRS: Taxpayers Have Difficulty Navigating the IRS, Reaching the Right Personnel to Resolve Their Tax Issues, and Holding IRS Employees Accountable.
4. FREE FILE: The IRS's Free File Offerings Are Underutilized and the IRS Has Failed to Set Standards for Improvement
5. FALSE POSITIVE RATES: The IRS's Fraud Detection Systems Are Marred by High False Positive Rates, Long Processing Times and Unwieldy Processes Which Continue to Plague the IRS and Harm Legitimate Taxpayers
6. IMPROPER EARNED INCOME TAX CREDIT PAYMENTS: Measures the IRS Takes to Reduce Improper Earned Income Tax Credit Payments Are Not Sufficiently Proactive and May Unnecessarily Burden Taxpayers
7. RETURN PREPARER OVERSIGHT: The IRS Lacks a Coordinated Approach to Its Oversight of Return Preparers and Does Not Analyze the Impact of Penalties Imposed on Preparers
8. CORRESPONDENCE EXAMINATION:
9. FIELD EXAMINATION:
10. OFFICE EXAMINATION:
11. POST-PROCESSING MATH ERROR AUTHORITY: The IRS Has Failed to Exercise Self-Restraint in Its Use of Math Error Authority, Thereby Harming Taxpayers.
12. MATH ERROR NOTICES: Although the IRS Has Made Some Improvements, Math Error Notices Continue to Be Unclear and Confusing, Thereby Undermining Taxpayer Rights and Increasing Taxpayer Burden.
13. STATUTORY NOTICES OF DEFICIENCY: The IRS Fails to Clearly Convey Critical Information in Statutory Notices of Deficiency, Making it Difficult for Taxpayers to Understand and Exercise Their Rights, Thereby Diminishing Customer Service Quality, Eroding Voluntary Compliance, and Impeding Case Resolution.
14. COLLECTION DUE PROCESS NOTICES: Despite Recent Changes to Collection Due Process Notices, Taxpayers Are Still at Risk for Not Understanding Important Procedures and Deadlines, Thereby Missing Their Right to an Independent Hearing and Tax Court Review.
15. ECONOMIC HARDSHIP: The IRS Does Not Proactively Use Internal Data to Identify Taxpayers at Risk of Economic Hardship Throughout the Collection Process.
16. FIELD COLLECTION: The IRS Has Not Appropriately Staffed and Trained Its Field Collection Function to Minimize Taxpayer Burden and Ensure Taxpayer Rights Are Protected.
17. IRS's AUTOMATED COLLECTION SYSTEM (ACS): ACS Lacks a Taxpayer-Centered Approach, Resulting in a Challenging Taxpayer Experience and Generating Less Than Optimal Collection Outcomes for the IRS.
18. OFFER IN COMPROMISE: Policy Changes Made by the IRS to the Offer in Compromise Program Make It More Difficult for Taxpayers to Submit Acceptable Offers.
19. PRIVATE DEBT COLLECTION: The IRS's Expanding Private Debt Collection Program Continues to Burden Taxpayers Who Are Likely Experiencing Economic Hardship, While Inactive PCA Inventory Accumulates.
20. PRE-TRIAL SETTLEMENTS IN THE U.S. TAX COURT: Insufficient Access to Available Pro Bono Assistance Resources Impedes Unrepresented Taxpayers From Reaching a Pre-Trial Settlement and Achieving a Favorable Outcome.
Also, of note in the report, according to Beth Lougen, is a legislative recommendation that notes that the IRS systems are among the oldest in the federal government including a 1960-era Individual Master File system along with other legacy systems. Reliance on these systems could become problematic in the future if not addressed now.
As the report points out, Beth states, there are a myriad of issues facing the IRS and taxpayers alike causing frustrations not to mention the impacts of the recent shutdown that have put services even further behind. In my opinion, it is imperative that the issues brought up in this report be addressed by Congress and the IRS quickly.
The entire report can be found at the Taxpayer Advocate Website - https://taxpayeradvocate.irs.gov/
Mary Beth Lougen is President and Founder of American-Expat Tax Services which is an international tax preparation that assists Americans living abroad and also the COO of Expat Tax Tools an international tax software company that offers the Form 8621 Calculator.
Mary Beth has over 30 years of U.S. income tax experience specializing in expat taxes. She has been a speaker at the Procopio and CalCPA International Tax Conferences along with a contributor to the Bloomberg BNA tax publications. Mary Beth carries the title Enrolled Agent which is the highest credential given out by the IRS. She is a U.S. Tax Court Practitioner, and also a respected writer and teacher in cross-border taxation.
American Expat Tax Service