Every year the National Taxpayer Advocate submits a report to Congress identifying the most significant issues encountered by taxpayers. On December 31st, Nina E. Olson (current National Taxpayer Advocate) released the year-end report which focuses on three main concerns: the need for tax reform, budget increases to aid the IRS in better serving taxpayers and collecting taxes, and a more diligent effort to assist victims of tax-related identity theft and return-preparer fraud.
In regards to tax reform, Olson noted compliance burdens and the magnitude of “tax expenditures” as key concerns. She also claimed that “Tax policy decisions and revenue decisions should be made separately and then married up.” Recommendations to improve this issue include two items, as noted in the IRS press release:
- Lay the groundwork for tax reform by holding meetings with constituents to discuss the complexity of the existing tax code and the trade-offs between tax rates and tax breaks that tax reform will require.
- Apply a “zero-based budgeting” approach to comprehensive tax reform that starts out with the assumption that all tax benefits will be eliminated and then adds a benefit back only if Members conclude that, on balance, the public policy benefits of providing that benefit through the tax code outweigh the complexity it imposes on taxpayers.
Recommendations for budget increases and the assistance for victims of identity theft were also provided.
Other “serious problems,” as detailed by the year-end report, include the following:
- The IRS’s failure to provide tax refunds to victims of preparer fraud.
- The IRS’s extraordinarily high audit rate of taxpayers who claim the adoption tax credit.
- The IRS’s Offshore Voluntary Disclosure program and their failure to distinguish adequately between “bad actors” and “benign actors.”
A detailed summary of this report can be found on the official IRS website.
The National Taxpayer Advocate submits two annual reports to the House Committee on Ways and Means and the Senate Committee on Finance. The first report is due every year at the end of June and must detail the TAS’s objectives for the upcoming fiscal year. The second report is due on December 31st, and, in addition to other requirements, must identify 20 of the most serious problems encountered by taxpayers.
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