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Archive for Nina Olson

The IRS Refuses To Provide Mandatory Employee Training On Taxpayer Rights

Nina Olson The IRS Refuses To Provide Mandatory Employee Training

For many years, I urged the IRS to adopt a Taxpayer Bill of Rights (TBOR) and for Congress to add the list of fundamental taxpayer rights to the Internal Revenue Code (IRC). In addition to its legal significance, a thematic, principle-based list of core taxpayer rights is an important source of foundational principles to guide IRS employees in their dealings with taxpayers, and provide information to taxpayers to assist them in their dealings with the IRS. A TBOR also serves as an organizing principle for tax administrators in establishing agency goals and performance measures. A TBOR also helps the IRS to restore trust in the tax system and ensure taxpayers know their rights and are able to avail themselves of those rights. Read more

The IRS’s Level Of Service Measure Fails To Adequately Show The Experience Of Taxpayers Seeking Assistance Over The Phone – Part 2

Nina Olson Measuring the Taxpayer Experience

In last week’s blog, I discussed how the Level of Service (LOS) measure used by the IRS paints a misleading picture of the taxpayer experience because it does not fully reflect taxpayers’ ability to speak with a telephone assistor and get the answer they need. The high LOS reported by the IRS masks its weaknesses in providing a high-quality customer experience, and reliance on this measure causes these weaknesses to go unaddressed. Similarly, the IRS reports an impressive overall toll-free customer satisfaction rating of 90 percent for fiscal year 2017; however, the response rate for the survey that is the basis for this measure has been low in previous years, and the measure only accounts for those callers that were able to speak with a telephone assistor. In this week’s blog, we will take a closer look to see how this rating stacks up against external evaluations and to understand the drivers of a successful taxpayer experience communicating with the IRS, regardless of the channel chosen or utilized. We will also examine how the IRS compares to other federal agencies and private sector companies, and identify practices the agency can adopt to prioritize the taxpayer experience. Read more

TAS Research Shows That Education Improves EITC Compliance

Nina Olson, IRS, Taxpayer Advocate Service, EITC

Recently, the IRS provided its response to my Most Serious Problem addressing EITC issues in the 2017 Annual Report to Congress. I want to reiterate my recommendation that the IRS should provide a dedicated toll-free Extra Help telephone line for EITC taxpayers.I’ve made similar recommendations herehere, and here. The IRS has not agreed to implement my recommendation. Instead, the IRS responded to my latest recommendation by saying, in part: Read more

The IRS’s Level of Service Measure Fails to Adequately Show the Experience of Taxpayers Seeking Assistance Over the Phone

Nina Olson, taxpayer, taxpayer advocate service, customer service

In a series of blogs I published earlier this year, Telephone Service in an Omnichannel Environment – The IRS Must Make Communicating with the IRS Over the Phone Easier for Taxpayers and Telephone Service in an Omnichannel Environment – The IRS Must Ensure Taxpayers Are Getting the Assistance They Need Over the Telephone, I explained why telephone communication is still an important way for taxpayers to get assistance from the IRS, even as the IRS expands its online self-help service options. In these blogs, I discussed how the IRS is failing to develop its telephone service as a vital part of an omnichannel communication environment, and thus failing to recognize the needs and preferences of taxpayers. In my 2017 Annual Report to Congress, I identified the limitations of the IRS’s telephone service as one of the Most Serious Problems encountered by taxpayers, and highlighted my concern that the IRS’s operational measures are overly focused on efficiency rather than the taxpayer experience. In this blog, I will further detail my concerns about the IRS’s reliance on the Accounts Management (AM) Customer Service Representative (CSR) Level of Service (LOS) as the benchmark measure to evaluate its phone service, as it can mask the struggles faced by taxpayers seeking assistance.   Read more

The IRS Might Recover EITC Using Its Newly Discovered Post-Processing Math Error Authority, But Is It Constitutional?

Nina Olson- IRS Might Recover Earned Income Tax Credit

My June Report to Congress included an Area of Focus entitled: “The IRS Has Expanded Its Math Error Authority, Reducing Due Process for Vulnerable Taxpayers, Without Legislation and Without Seeking Public Comments.”  The post-processing math error issue came up after a report by the Treasury Inspector General for Tax Administration (TIGTA) said the IRS improperly paid refundable credits, including the Earned Income Tax Credit (EITC), to those filing 2016 returns with taxpayer identification numbers (TINs) (e.g., Social Security Numbers) that were issued after the due date of the returns. TINs are long strings of numbers that can easily contain typos. The IRS committed to “evaluate this population for inclusion in the appropriate post-refund treatment program.”  Perhaps because it costs $1.50 to resolve an erroneous EITC claim using automated math error authority (MEA) compared to $278 for an audit (according to TIGTA), the Wage and Investment Division (W&I) planned to use MEA to recover these credits in 2018.

I asked Counsel about the legality of using MEA to disallow credits long after the IRS had processed the returns (i.e., post-processing) and paid them. Counsel responded on April 10, 2018, with a Program Manager Technical Advice (PMTA) that approved the practice (here). It concluded there were no due process concerns. This blog explores the due process that the government may be constitutionally required to provide before recovering EITC from those who depend on it to survive.

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As A Result Of TAS Advocacy, The IRS Is Working To Address A Computer Glitch That Allowed Collection Activity On Accounts With Expired Collection Statute Expiration Dates But Many Issues Remain Unresolved

Nina Olson- IRS Computer Glich

About two years ago, TAS received cases where either the taxpayer or the Power of Attorney (POA) correctly questioned the validity of a collection statute expiration date (CSED) calculation while working with Collection. Based on the cases we were seeing, TAS looked deeper and identified a systemic problem. Working together, TAS Case Advocacy and Systemic Advocacy identified affected cases and are working to make sure accounts are corrected and refunds (where applicable) are issued. But this is a complicated issue that involves a case-by-case review. I want to get the word out about this problem so taxpayers or their representatives are empowered to advocate for themselves or their clients.

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The Systemic First Time Abatement Policy Currently Under Consideration By The IRS Would Override Reasonable Cause Relief And Jeopardize Fundamental Taxpayer Rights

Nina Olson August 30

The IRS offers a First Time Abatement (FTA) program that is intended to be, and often is, taxpayer-favorable. Nevertheless, as currently implemented, the FTA sometimes overrides the reasonable cause abatement and disadvantages taxpayers. The scope of this problem will increase dramatically if the IRS follows through with its current proposal to automatically apply the FTA. In this week’s blog, I will focus on how this systemic FTA would be implemented, how it would essentially write the reasonable cause abatement out of the law, and how a revised approach would allow taxpayers to enjoy the intended benefits of both abatements.

The First Time Abatement Provides an Important Mechanism for Penalty Relief

Occasionally, otherwise-compliant taxpayers make good faith mistakes regarding the filing of their tax return or payment of their tax obligations. Further, not all of these errors are eligible for the reasonable cause abatement provided by Internal Revenue Code (IRC) §§ 6651(a) and 6656(a). In my 2001 Annual Report to Congress, I provided the following example of this problem:

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Taxpayer Advocate Services (TAS) Cases Demonstrate The Harm Caused By IRS Policies On Passport Certification

Nina Olson- IRS Passport Certification

My last blog on passport issues discussed the IRS’s continued refusal to exclude already open TAS cases from passport certification and my efforts to advocate for these taxpayers in the form of almost 800 Taxpayer Assistance Orders (TAOs) and a Taxpayer Advocate Directive that I plan to further elevate to the Commissioner. Today, I want to provide an update on TAS cases and discuss some examples that show how the IRS’s refusal to provide a stand-alone notice prior to certification harms taxpayers.

Internal Revenue Code (IRC) § 7345 authorizes the IRS to certify a taxpayer’s seriously delinquent tax debt to the Department of State for the purposes of passport denial, limitation, or revocation. A seriously delinquent tax debt is an assessed, individual tax liability exceeding $51,000 (adjusted for inflation) for which either a notice of federal tax lien has been filed or a levy has been made. The law requires only two forms of notice to taxpayers:  language in Collection Due Process (CDP) hearing notices and a notice sent “contemporaneously” with the certification the IRS sends to the Department of State.

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IRS Administration Of The Section 965 Transition Tax Contravenes Congressional Intent And Imposes Unintended Burden On Taxpayers

Nina Olson, National Taxpayer Advocate On Section 965 Transition Tax

When Congress passes legislation as comprehensive and technical as the Tax Cuts and Jobs Act (TCJA), drafting and implementation glitches inevitably arise. This week, I will discuss one that largely affects corporate taxpayers, particularly shareholders of Controlled Foreign Corporations. Spoiler alert: This is a case where Congress enacted a provision with a transition rule intended to be extremely taxpayer-favorable, and the IRS is administering the provision in a way that seemingly runs contrary to congressional intent. It relates to the administration of Internal Revenue Code (IRC) § 965(h). Some of the background is a bit technical, so bear with me.

Prior to tax reform, the United States imposed a relatively high maximum federal corporate income tax rate of 35 percent. According to the House Ways and Means Committee, “many domestic companies were reluctant to reinvest foreign earnings in the United States, when doing so would subject those earnings to high rates of corporate income tax rates.” As a result, those companies “accumulated significant untaxed and undistributed foreign earnings.” In other words, they left their earnings parked overseas.

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National Taxpayer Advocate Report: Landmark Tax Legislation

Nina Olson, Landmark Tax Legislation

Twenty years ago this week, the IRS Restructuring and Reform Act of 1998 was enacted. This landmark legislation created significant taxpayer rights – including the office of the National Taxpayer Advocate and Local Taxpayer Advocate offices, Low Income Taxpayer Clinics (more on that in next week’s blog); Collection Due Process hearings (the first time taxpayers had meaningful access to courts to challenge the appropriateness of IRS lien and levy actions), “innocent spouse” relief expansion to provide for separate liability and equitable relief; expansion of offer in compromise relief on grounds of economic hardship, equity, and public policy; protection against lifestyle and repetitive audits. Some provisions are only now being clarified, as in the Graev and Chai line of cases. Other provisions still have not been properly implemented, such as the requirement that a specific employee’s name, phone number, and unique identifying number be placed on manually-generated correspondence. Nevertheless, RRA 98 changed tax administration as we know it, and, in my opinion, moved the United States in the forefront of taxpayer protections.

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The National Taxpayer Advocate Responds To Private Debt Collectors’ Contentions

Nina Olson, IRS Use Of Debt Collectors

Last week, I returned from vacation to read a press release from a newly formed organization consisting of private debt collection (PDC) agencies working IRS accounts. “Nina Olsen [sic] has consistently made false and misleading claims about the IRS and its Private Debt Collection Program to advance her own political agenda,” the organization’s spokesperson asserted.

While I don’t often take the time to respond to ad personam attacks, this one deals with a core IRS program, so I think it deserves a response – particularly given some of the questionable claims it made.

It’s no secret that I believe the collection of taxes is a core governmental function that should not be outsourced to for-profit businesses that are paid on commission. I have written about the use of private collection agencies (PCAs) repeatedly in my annual reports to Congress and elsewhere. But it is worth taking a moment to summarize the basis of my concerns. While others have investigated the practices used by private collection agencies, my focus has been on IRS policies and IRS administration of the statutory program.

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National Taxpayer Advocate: 2019 Objectives Report To Congress

Nina Olson, 2019 Taxpayer Advocate Objective

The advocate states in the current environment, it is critical for the IRS to direct its resources where they have the greatest positive effect on achieving tax compliance, particularly voluntary tax compliance.  Over the long run, voluntary compliance is the least expensive form of compliance to maintain.  It is also the least burdensome from the taxpayer’s perspective.  Importantly, voluntary tax compliance is heavily linked to customer service and the customer experience.

The President’s Management Agenda for 2018 states: “Federal customers . . . deserve a customer experience that compares to – or exceeds – that of leading private sector organizations, yet most Federal services lag behind the private sector.”  The Agenda identifies several Cross-Agency Priority (CAP) Goals, including CAP Goal 1: Modernize IT to Increase Productivity and Security, and CAP Goal 4: Improving Customer Experience with Federal Services.  The Agenda notes that “the 2016 American Consumer [sic] Satisfaction Index and the 2017 Forrester Federal Customer Experience Index show that, on average, Government services lag nine percentage points behind the private sector.” How do the American Customer Satisfaction Index (ACSI) and the Forrester Federal Customer Experience Index assess the IRS’s customer service relative to other federal agencies and the private sector? The American Customer Satisfaction Index ranks the Treasury Department 12 out of 13 Federal Departments and says the Treasury Department’s score is effectively an IRS score because most citizens make use of Treasury services via the [IRS] tax-filing process.

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