United States

National Taxpayer Advocate identifies "serious problems" facing IRS

The National Taxpayer Advocate delivers its annual report to congress


National Taxpayer Advocate, Nina E. Olson, released her 2017 Annual Report to Congress today. Per IRC section 7803(c)(2)(B)(ii), the National Taxpayer Advocate is required to submit this report to Congress and include at least 20 of the most serious problems taxpayers encounter along with recommendations to address those problems. Also in the Annual Report to Congress, for the first time this year, is the Taxpayer Advocate’s Purple Book which contains a summary of 50 legislative recommendations that are intended to strengthen taxpayer rights and improve tax administration.

Among other issues, in this year’s Annual Report to Congress, Ms. Olson addresses the IRS’s ongoing budget concerns, and includes the telephone service centers, audit rates, and appeals procedures in its “Most Serious Problems” section. In the preface to the report, Ms. Olson wrote that, “Funding cuts have rendered the IRS unable to provide acceptable levels of taxpayer service, unable to update its technology to improve its efficiency and effectiveness, and unable to maintain compliance programs that both promote compliance and protect taxpayer rights.  ’Shortcuts’ have become the norm, and ‘shortcuts’ are incompatible with high-quality tax administration.”

The report warns that the IRS’s “archaic” telephone technology, along with the IRS’s desire to reduce telephone interactions, has the potential to reduce voluntary compliance. Ms. Olson notes that when customers receive poor customer service in other industries, they have the option of choosing a competitor, however taxpayers do not have that option with the IRS but they may decide to take their chances with noncompliance. This could in effect increase the burden on the IRS by requiring more time spent on auditing tax returns.

There are many other ‘serious problems’ identified throughout the report along with recommendations, including some that require no additional funding. Taxpayer’s might want to become familiar with the problems identified and speak to their tax advisors if they have any concerns.


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