The National Taxpayer Advocate Submits Year-End Report to Congress

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tax-updateEvery year the National Taxpayer Advocate submits a report to Congress identifying the most significant issues encountered by taxpayers.  On January 9th, 2014, National Taxpayer Advocate Nina E. Olson released the 2013 annual report which focuses on two main concerns: the need for a taxpayer bill of rights and inadequate IRS funding.

In regards to the 2013 tax year, Olson explained, “The year 2013 was a very challenging one for the IRS. Because of sequestration, the IRS’s funding was substantially cut, which translated into a reduction in taxpayer service.  Public trust in its fairness and impartiality was called into question because of reports the IRS subjected certain applicants for tax-exempt status to greater review based on political-sounding names. And because of the 16-day government shutdown, the agency could not complete preparations for the upcoming tax filing season on time, delaying the date on which taxpayers can first file returns and claim refunds.”

Recommended Taxpayer Bill of Rights

Regarding the concern for a taxpayer’s bill of rights, the report explains that our tax system hinges on voluntary compliance, which 98% of taxpayers offer.  Regardless of this high level of compliance, a survey found that less than half of those respondents believed they have rights before the IRS.

The report further explains, “The Internal Revenue Code provides dozens of real, substantive taxpayer rights.  However, these rights are scattered throughout the Code and are not presented in a coherent way. Consequently, most taxpayers have no idea what their rights are and therefore often cannot take advantage of them.”

Inadequate IRS Funding

The report claims that inadequate funding is one of the greatest taxpayer problems.  As a result, taxpayers find it difficult to get questions answered easily as the IRS finds it increasingly difficult to keep pace with taxpayer demand.

“The requirement to pay taxes is generally the most significant burden a government imposes on its citizens,” the report says. “The National Taxpayer Advocate believes the government has a practical and moral obligation to make compliance as simple and painless as possible.”

Other Issues Addressed

The report noted the following concerns as some of the “most serious problems” currently facing taxpayers:

  • Need for return preparer oversight.
  • The IRS’s conceptual approach toward collection of delinquent tax liabilities.
  • The impact of the IRS’s offshore voluntary disclosure programs on taxpayers who make honest mistakes.
  • New TAS research studies on tax compliance.

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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Resource

–.  “National Taxpayer Advocate Delivers Annual Report to Congress: Focuses on Taxpayer Bill of Rights and IRS Funding.” 9 January 2014 IRS.gov

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