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Archive for Nina Olson

The IRS Has Not Adjusted Its Private Debt Collection Initiative To Minimize Harm To Vulnerable Taxpayers

Nina Olson, National Taxpayer Advocate

Since the IRS implemented the private debt collection (PDC) initiative last year, I have been concerned that taxpayers whose debts are assigned to private collection agencies (PCAs) will make payments even when they are likely in economic hardship – that is, they are unable to pay their basic living expenses. As discussed in my 2017 Annual Report to Congress, this is exactly what has been happening. The recent returns of approximately 4,100 taxpayers who made payments to the IRS after their debts were assigned to PCAs through September 28, 2017 show:

  • 28 percent had incomes below $20,000;
  • 19 percent had incomes below the federal poverty level; and
  • 44 percent had incomes below 250 percent of the federal poverty level.

As a refresher, the IRS uses 250 percent of the federal poverty level as a proxy for economic hardship in several situations, such as in administering the Federal Payment Levy Program (FPLP). FPLP is an automated system the IRS uses to match its records against those of the government’s Bureau of the Fiscal Service to identify taxpayers with unpaid tax liabilities who receive certain payments from the federal government. IRC § 6331(h) allows the IRS to issue continuous levies for up to 15 percent of federal payments due to these taxpayers who have unpaid federal liabilities. As explained in my 2014 Annual Report to Congress, the IRS excluded Social Security recipients whose incomes were below 250 percent of the federal poverty level after a 2008 TAS research study demonstrated that the FPLP program levied on taxpayers who were experiencing economic hardship.

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Statement Of Nina Olson – National Taxpayer Advocate Joint Hearing On Continued Oversight Over The IRS

Nina Olsen National Taxpayer Advocate

Thank you for inviting me to testify at your hearing today on IRS operations. As you know, I lead the Taxpayer Advocate Service (TAS), an independent organization within the IRS that advocates for taxpayers. TAS has two main functions – “case advocacy” and “systemic advocacy.” In most years our case advocacy operations
assist more than 200,000 taxpayers in resolving account problems with the IRS.2 On the systemic side, TAS identifies problems that are harming groups of taxpayers, and we make administrative and legislative recommendations to mitigate those problems.
By statute, I am required to submit two annual reports to the congressional tax-writing committees each year, and I describe, and make recommendations to mitigate, the “most serious problems” facing taxpayers in my December 31 report.

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The Flood That Didn’t Materialize When The IRS Removed The Two-Year Period For Requesting Equitable Innocent Spouse Relief And Granted Relief More Frequently

Innocent spouse relief, which has been available under IRC § 6015 since 1998 (and was available prior to that, in a more limited way, under IRC § 6015(e)), provides three avenues of relief. Section 6015(b) provides “traditional” relief for deficiencies.

Section 6015(c) also provides relief for deficiencies for certain spouses who are divorced, separated, widowed, or not living together, by allocating the liability between the spouses. Section 6015(f) provides “equitable” relief from both deficiencies and underpayments, but only applies if a taxpayer is not eligible for relief under IRC § 6015(b) or (c).

As I reported in my 2001 Annual Report to Congress, the IRS received 46,619 claims for innocent spouse relief in fiscal year (FY) 1999 (i.e., from October 1, 1998, to September 30, 1999). The IRS received 54,402 claims for relief in FY 2000.

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Taxpayer Advocate Service Survey Confirms Need To Maintain And Enhance A Robust Omni-Channel Taxpayer Service Strategy

Nina Olson, National Taxpayer Advocate, Tax Blog, Washington D.C., USA, TaxConnections

In my most recent Annual Report to Congress, I published a study in support of the Service Priorities Project (SPP), a joint effort between Taxpayer Advocate Service (TAS) and IRS Wage & Investment (W&I). The goal of the SPP is to produce a matrix to help the IRS identify where to allocate its taxpayer service resources. To assist the IRS in determining service priorities, the matrix presents data on taxpayer needs and preferences as well as more traditional IRS “efficiency” concerns. While W&I initially worked with TAS in the development of the SPP, ultimately I felt that the additions to the Taxpayer Experience Survey did not address the missing data needed to complete the SPP matrix. I directed TAS Research to develop a study and fill in the gaps of the SPP. The result, A Further Exploration of Taxpayers’ Varying Abilities and Attitudes Toward IRS Options for Fulfilling Common Taxpayer Needs, revealed several areas that I’d like to highlight today. Read more

2018 Tax Forums Will Feature TAS Seminars, Case Resolution Program

Nina Olson, Tax Blog, Tax Advocate, Washington D.C. USA, TaxConnections

Each year the IRS sponsors the Nationwide Tax Forums, a three-day series of tax education and networking conferences for tax professionals in cities around the country. These events feature the latest information from the IRS, news about tax law changes, the chance to meet with software vendors, and the opportunity to attend nearly 50 seminars presented by IRS employees and members of professional associations.

At this year’s Forums, Taxpayer Advocate Service (TAS) will present a series of seminars, oversee the Case Resolution Program, and host two focus groups. TAS’s seminars include: Read more

Effective Use Of The Offer In Compromise (OIC) Program Will Save Valuable IRS Resources While Bringing Finality To Taxpayers

Nina Olson, Washington D.C., USA, TaxConnections

When a taxpayer can’t afford to pay a tax liability in full, Internal Revenue Code (IRC) § 7122 authorizes the IRS to accept less than the full amount due in the form of an offer in compromise (OIC). As a condition of acceptance for an OIC, the taxpayer must agree to remain compliant with his or her filing and paying requirements for the five years following the acceptance of the OIC. So, although the IRS agrees to settle a tax debt for less than the full amount due, the IRS secures future filing and payment compliance for the next five years, hopefully developing better taxpayer habits, while also collecting an amount that it is unlikely to collect otherwise. On the other hand, the taxpayer is no longer saddled with a debt that cannot be satisfied in full. Read more

What Is Wrong With IRS User Fees?

Nina Olson, Tax Advocate, Tax Blog, Washington D.C., USA, TaxConnections

The IRS has been increasing user fees to fund its operations. It recently increased or proposed to increase a wide range of fees including the fees for installment agreements (IAs)offers-in-compromise (OICs)pre-filing agreements (PFAs)private letter rulings (PLRs), and special enrollment examinations (SEE). I raised concerns about these increases in my 2015 and 2017 Annual Reports to Congress.

On Feb. 9, 2018, Congress enacted the Bipartisan Budget Act of 2018 (P.L. 115-123), which addresses concerns about the IRS’s largest fee revenue generator – the IA fee increases. The law prevents the IRS from increasing the IA fee again without legislation. It also requires the IRS to waive or refund the fee for taxpayers with income below 250 percent of the federal poverty level who authorize the IRS to directly debit the IA payments (DDIA) from a bank account or who cannot set up a DDIA (e.g., because they do not have a bank account). This legislation suggests that Congress shares some of my concerns. This blog summarizes our concerns. Read more

National Taxpayer Advocate Nina Olson Testifies

Nina Olson, Taxpayer Advocate, Tax Blog, Washington D.C., USA, TaxConnections

National Taxpayer Advocate Nina E. Olson testified before the House Subcommittee on Health Care, Benefits, and Administrative Rules and Subcommittee on Government Operations Committee on Oversight and Government Reform on Oversight today at a hearing entitled, “Continued Oversight Over the Internal Revenue Service.”

As you know, I lead the Taxpayer Advocate Service (TAS), an independent organization within the IRS that advocates for taxpayers. TAS has two main functions – “case advocacy” and “systemic advocacy.” In most years our case advocacy operations
assist more than 200,000 taxpayers in resolving account problems with the IRS.2 On the systemic side, TAS identifies problems that are harming groups of taxpayers, and we make administrative and legislative recommendations to mitigate those problems.

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The IRS Can Do A Better Job Providing Military Taxpayers With Accurate And Up-To-Date Information About Tax Issues They Are Facing

Nina Olson, Tax Advocate, Tax Blog, Washington D.C., USA, TaxConnections

As we near the end of the 2018 filing season, it is worth reflecting on the challenges taxpayers face in complying with complex tax law provisions. In my 2017 Annual Report to Congress, I identified IRS customer service and information provided to military taxpayers as one of the Most Serious Problems facing taxpayers. In this blog, I will discuss the needs and preferences of military taxpayers and recap some of my recommendations on how the IRS can substantially improve its service to this taxpayer population. Read more

A Digital “Mailbox Rule” Is Required As The IRS Steers Taxpayers Toward Self-Help Digital Tools

As the IRS steers taxpayers toward self-help digital tools, it is necessary to bring the “statutory mailbox rule” into the 21st century. Currently, the statutory mailbox rule in IRC § 7502 does not apply to the electronic transmission of many time-sensitive documents and payments to the IRS. The rule provides that if the requirements set forth in the statute are met, a document or payment is deemed to be filed or paid on the date of the postmark stamped on the envelope.

If the postmark date is on or before the last day of the period prescribed for filing the document or making the payment, the document or payment is considered timely filed or paid even if it is received after the due date. Further, IRC § 7502(c) provides that registered or certified mail, or methods deemed substantially equivalent by the Secretary of Treasury, is prima facie evidence of delivery. Read more

A Discussion Of Belated Alternatives To The Offshore Voluntary Disclosure Program And Recommendations For Further Improvements (Part 3 of 3)

Nina Olson, Taxpayer Advocate, Tax Blog, Washington D.C., USA, TaxConnections

In the first blog in this series we discussed how those who participate in amnesties also tend to be people who made inadvertent errors, that is, “benign” actors, rather than bad actors. We discussed how it can make sense to offer some form of amnesty before implementing a sudden increase in penalties or enforcement. Otherwise, the increase is more likely to be viewed as unfair and erode trust for the government. Moreover, a decline in trust can erode voluntary compliance.

In the second blog, we cited data showing that, consistent with the research on amnesties, IRS’s first amnesty alternative – the Offshore Voluntary Compliance Initiative (OVCI) – generally attracted people who failed to report offshore accounts but had paid their taxes or had under-reported small amounts. Read more

An Analysis Of Tax Settlement Programs As Amnesties – Why IRS’s Offshore Voluntary Disclosure Settlement Programs Posed Risks To Voluntary Compliance (Part 2 of 3)

Nina Olson, Tax Advocate, Tax Blog, Washington D.C., USA, TaxConnections

In last week’s blog, we discussed how broad amnesties can blunt economic deterrence, but narrow amnesties or amnesty alternatives (e.g., amnesties that forgive only penalties before noncompliance is detected) do not necessarily have the same negative effects. We also cited research suggesting that those who participate in amnesties also tend to be people who made inadvertent errors (i.e., “benign” actors, rather than bad actors). Furthermore, without an amnesty, a sudden increase in penalties or enforcement is more likely to be viewed as unfair and erode trust for the government – a view that can erode voluntary compliance. Read more

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