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Archive for National Taxpayer Advocate

What The Inflation Reduction Act Means For You

What The Inflation Reduction Act Means For You

The Inflation Reduction Act, which includes expanded or extended tax credits and additional funding for the IRS, was signed into law on August 16, 2022.

How could the Inflation Reduction Act impact you when filing your next tax return?

Below is a simplified summary of how the Inflation Reduction Act may affect you.

Health Care

The Inflation Reduction Act includes:

  • Extension of Affordable Care Act (ACA) funding through 2025. This funding, which was due to expire at the end of 2022, will allow consumers to continue to buy insurance with lower premiums through the Health Insurance Marketplace (also referred to as the Marketplace or the Exchange).
  • Extension of the American Rescue Plan Act (ARPA) temporary exception that allows taxpayers with incomes above 400 percent of the Federal Poverty Level to qualify for the Premium Tax Credit.

Energy Efficient Home Improvement Credit

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What The Inflation Reduction Act Means For You

What The Inflation Reduction Act Means For You

The Inflation Reduction Act, which includes expanded or extended tax credits and additional funding for the IRS, was signed into law on August 16, 2022.

How could the Inflation Reduction Act impact you when filing your next tax return?

Below is a simplified summary of how the Inflation Reduction Act may affect you.

Health Care

The Inflation Reduction Act includes:

  • Extension of Affordable Care Act (ACA) funding through 2025. This funding, which was due to expire at the end of 2022, will allow consumers to continue to buy insurance with lower premiums through the Health Insurance Marketplace (also referred to as the Marketplace or the Exchange).
  • Extension of the American Rescue Plan Act (ARPA) temporary exception that allows taxpayers with incomes above 400 percent of the Federal Poverty Level to qualify for the Premium Tax Credit.

Energy Efficient Home Improvement Credit

The Nonbusiness Energy Property Credit was extended through 2032 and renamed the Energy Efficient Home Improvement Credit.

Starting in 2023, the credit will be equal to 30 percent of the costs of all eligible home improvements made during the year. Additionally:

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National Taxpayer Advocate Reimagines The IRS With A Dramatically Improved Experience: Part 1

IRS Wants To Improve Taxpayer Experience

Last month, Congress passed the Inflation Reduction Act (IRA22), which provides the IRS with supplemental funding of nearly $80 billion over the next ten years. More than half the funding has been earmarked for tax law enforcement, and that has attracted a good deal of public attention. But the legislation also provides about $3.2 billion for taxpayer services, including pre-filing assistance and education, filing and account services, and taxpayer advocacy services; $4.8 billion to modernize the IRS’s information technology (IT) systems, including development of callback technology and other technology to provide a more personalized customer service; and $25.3 billion to support its taxpayer service and enforcement operations, including rent payments, facilities services, printing, postage, physical security, research and statistics of income, telecommunications, and information technology operations and maintenance.

This additional funding should be a game changer for taxpayers and practitioners alike. If spent wisely, the funding will give IRS management the resources it needs to bring U.S. tax administration into the 21st century by enabling it to hire and train the workforce of the future, replace its antiquated IT systems, and generally revamp the taxpayer experience based on principles of fair and equitable tax administration. I am excited to be part of this historic effort, and I am optimistic that taxpayer service will significantly improve in the near future.

As most readers of this blog know, the National Taxpayer Advocate is required by law to submit two annual reports to Congress that, among other things, make administrative recommendations to mitigate taxpayer problems. Frequently, IRS leaders tell us they agree with our recommendations in concept, but they lack the resources to implement them. With the supplemental funding it has received, now is the time to act on my recommendations.

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Some of Our Nation’s Most Vulnerable Taxpayers Will Automatically Have Their Accounts Excluded From Assignment To Private Collection Agencies

NATIONAL TAXPAYER ADVOCATE
Background: Since 2018, TAS has been urging the IRS to stop assigning to private collection agencies (PCAs) the accounts of taxpayers who receive Supplemental Security Income (SSI) or Social Security Disability Income (SSDI). In 2019, Congress passed the Taxpayer First Act (TFA), which required the IRS to exclude these accounts. Specifically, TFA § 1205(a) amended Internal Revenue Code § 6306(d)(3) to exclude from assignment to PCAs the debts of taxpayers “substantially all of whose income consists of disability insurance benefits under section 223 of the Social Security Act or supplemental security income benefits under title XVI of the Social Security Act.”

The IRS had no trouble systemically excluding the accounts of taxpayers who receive SSDI. SSDI payments are reported to the IRS by the Social Security Administration (SSA) on Form 1099, and the IRS therefore knows the identities of SSDI recipients. But the IRS was not able to systemically exclude the accounts of taxpayers who receive SSI benefits. The SSA does not issue 1099s with respect to SSI recipients, and the SSA took the position that privacy law barred it from sharing the names of SSI recipients with the IRS.

In the Consolidated Appropriations Act, 2021, Congress fixed this. It authorized the Secretary of the Treasury to disclose to SSA the identities of taxpayers whose delinquent accounts are eligible for PCA assignment, and it required the SSA Commissioner to enter into an agreement with the Secretary of the Treasury under which the SSA indicates whether such individuals receive SSI or SSDI benefits. Over the past 18 months, the IRS and the SSA have been working out procedures to allow for computer matching the list of SSI recipients against the list of taxpayers with delinquent accounts otherwise eligible for PCA assignment.

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Tax Return Backlog Is Still Crushing IRS

ERIN COLLINS - NATIONAL TAXPAYER ADVOCATE

National Taxpayer Advocate Erin M. Collins released her statutorily mandated mid-year report to Congress. The report expresses concern about continuing delays in the processing of paper-filed tax returns and the consequent impact on taxpayer refunds. At the end of May, the agency had a backlog of 21.3 million unprocessed paper tax returns, an increase of 1.3 million over the same time last year.

“The IRS has said it is aiming to crush the backlogged inventory this year, and I hope it succeeds,” Collins wrote. “Unfortunately, at this point the backlog is still crushing the IRS, its employees, and most importantly, taxpayers. As such, the agency is continuing to explore additional processing strategies.”

Backlog of Unprocessed Paper Tax Returns

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Some Of Our Nation’s Most Vulnerable Taxpayers Will Automatically Have Their Accounts Excluded From Assignment To Private Collection Agencies

National Taxpayer Advocate

Background: Since 2018, TAS has been urging the IRS to stop assigning to private collection agencies (PCAs) the accounts of taxpayers who receive Supplemental Security Income (SSI) or Social Security Disability Income (SSDI). In 2019, Congress passed the Taxpayer First Act (TFA), which required the IRS to exclude these accounts. Specifically, TFA § 1205(a) amended Internal Revenue Code § 6306(d)(3) to exclude from assignment to PCAs the debts of taxpayers “substantially all of whose income consists of disability insurance benefits under section 223 of the Social Security Act or supplemental security income benefits under title XVI of the Social Security Act.”

The IRS had no trouble systemically excluding the accounts of taxpayers who receive SSDI. SSDI payments are reported to the IRS by the Social Security Administration (SSA) on Form 1099, and the IRS therefore knows the identities of SSDI recipients. But the IRS was not able to systemically exclude the accounts of taxpayers who receive SSI benefits. The SSA does not issue 1099s with respect to SSI recipients, and the SSA took the position that privacy law barred it from sharing the names of SSI recipients with the IRS.

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National Taxpayer Advocate Issues Midyear Report To Congress

Congressional Report - National Taxpayer Advocate

National Taxpayer Advocate Issues Midyear Report To Congress; Expresses Concern About Continued Refund Delays And Poor Taxpayer Service

WASHINGTON — National Taxpayer Advocate Erin M. Collins released her statutorily mandated midyear report to Congress. The report expresses concern about continuing delays in the processing of paper-filed tax returns and the consequent impact on taxpayer refunds. At the end of May, the agency had a backlog of 21.3 million unprocessed paper tax returns, an increase of 1.3 million over the same time last year.

“The IRS has said it is aiming to crush the backlogged inventory this year, and I hope it succeeds,” Collins wrote. “Unfortunately, at this point the backlog is still crushing the IRS, its employees, and most importantly, taxpayers. As such, the agency is continuing to explore additional processing strategies.”

The report points out that the significant majority of individual taxpayers receive refunds. “At the end of the day, a typical taxpayer cares most about receiving his or her refund timely,” Collins wrote. “Particularly for lower income taxpayers who receive Earned Income Tax Credit benefits, tax refunds may constitute a significant percentage of their household income for the year. Thus, these processing delays are creating unprecedented financial difficulties for millions of taxpayers and outright hardships for many.”

Among business taxpayers, many have been waiting extended periods to receive Employee Tax Retention Credits for which they are eligible, in addition to their regular refunds.

Key taxpayer challenges this year have included return processing delays, correspondence processing delays, and difficulty reaching the IRS by phone.

Backlog of Unprocessed Paper Tax Returns

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National Taxpayer Advocate: Why Do I Owe A Penalty And Interest And What Can I Do About It?

National Taxpayer Advocate: Why Do I Owe A Penalty And Interest And What Can I Do About It?

There are many reasons why the IRS may charge penalties on your tax account. The IRS is legally required, under IRC § 6601(a), to charge interest when you fail to pay the full amount you owe on time. Interest may also accrue on penalties. Interest, and any applicable penalties, will continue to accrue until you pay your balance due in full. Here are some of the most common penalties, information on why they may have been charged, and how to request penalty abatement (removal) if applicable.

First let’s talk about some common penalty charges on individual accounts, along with interest, and why the IRS charges them.

Common penalties include:

  • Failure to file – you didn’t file your tax return by the return due date or extended due date if an extension to file is requested and approved.
  • Failure to pay – you didn’t pay the taxes reported on your tax return in full by the due date of the original tax return. An extension to file doesn’t extend the time to pay so you must pay your taxes by the original due date of the tax return even if you have requested an extension of time to file your tax return. In addition, the IRS may charge a failure to pay penalty if the IRS sends a request for payment and you fail to pay on time.
  • Failure to pay proper estimated tax – you didn’t pay enough taxes due for the year with your quarterly estimated tax payments, or through withholding, when required.
  • Bad check – your bank doesn’t honor your check or other form of payment.

Interest

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What To Do If You Receive Notification Your Tax Return Is Being Examined Or Audited

What To Do If You Receive Notification Your Tax Return Is Being Examined Or Audited

If the IRS selects your tax return for audit (also called examination), it doesn’t automatically mean something is wrong.

The IRS performs audits by mail or in person. The notice you receive will have specific information about why your return is being examined, what documents if any they need from you, and how you should proceed.

Once the IRS completes the examination, it may accept your return as filed or propose changes. These changes may affect the amount of tax you owe or the amount of your refund.

Got an IRS notice saying they are auditing your tax return?

If you are unable to understand the notice, you can use our Did you get a notice from the IRS? section on our Home page that allows you to enter the notice or letter number to find out more about it, what action you may need to take, and where in the IRS process it falls. Or you can go to our Taxpayer Roadmap directly to see where your tax return is within the IRS process, how the return got there, and what’s next. Once in the Roadmap, you can still look up a specific notice if it isn’t already listed to find out what to do next.

Type of audit/examination and what to do for each type

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2022 TAS Systemic Advocacy Objectives

2022 NTA Systemic Advocacy Objectives

Systemic Advocacy Objectives describe the objectives TAS will pursue to address systemic issues causing taxpayer burden or harm. Similar to the way Most Serious Problems are identified in the Annual Report to Congress, the National Taxpayer Advocate calls upon a multitude of sources to assist in identifying Systemic Advocacy Objectives including the experience of TAS staff, trends in advocacy efforts and TAS casework, and interactions with practitioners and external stakeholders.

TAS’s Systemic Advocacy Objectives for FY 2022 are:

  1. Improve IRS Recruitment, Hiring, and Retention Strategies
  2. Collaborate With the IRS in the Development of Its Training Strategy to Enhance the Taxpayer Experience
  3. Expand the Functionality of Online Account Services for Taxpayers and Practitioners
  4. Expand Technology Capabilities and Access to Customer Service
  5. Provide Taxpayers a Better Understanding of IRS Processes and Procedures by Promoting Detailed and Timely IRS Transparency
  6. Improve Taxpayer Access to Digital Communication Options and Permit Digital Signatures
  7. Mitigate the Impact of the 2021 Filing Season Challenges and Refund Delays
  8. Minimize Refund Delays for Taxpayers Whose Legitimate Returns Are Delayed by IRS Fraud Filters
  9. Expand Electronic Filing Capabilities
  10. Provide Administrative Appeal Rights to Taxpayers Requesting Abatement and Include Additional Status Information on the Where’s My Amended Return Tool
  11. Analyze Math Errors Attributable to the 2020 Recovery Rebate Credit/Economic Impact Payments to Eliminate Future Recovery Rebate Credit Errors During 2021
  12. Monitor the IRS’s Recovery for the Unemployment Compensation Exclusion
  13. Assist Taxpayers Who Experience Changes Relating to the Child Tax Credit During 2021
  14. Improve Correspondence Audit Communications and Focus on High Default Rates for Taxpayers With Adjusted Gross Incomes Below $50,000
  15. Identify Potential Collection Barriers for Low-Income Taxpayers
  16. Continue Advocacy Efforts to Correct Erroneous Collection Statute Expiration Dates Due to Pending Installment Agreements
  17. Increase Taxpayer Participation in the Offer in Compromise Program
  18. Mitigate the Unintended Effects of the 2020 and 2021 Filing Season Postponements on Timely Filed Refund Claims
  19. Improve Timeliness of Tentative Allowance Refunds During National Emergencies
  20. Advocate for Efficiencies and Additional IRS Resources to Timely Process Individual Taxpayer Identification Number Applications
  21. End Systemic Assessment of International Information Return Penalties That Harm Taxpayers and Burden the IRS
  22. Advocate for Improved Voluntary Disclosure Practice to Reduce Taxpayer Uncertainty and Encourage Participation

Read All TAS Systemic Advocacy Objectives

How To Keep Your Personal And Tax Information Safe

National Taxpayer Advocate - Erin Collins

Here are some tips to follow to keep you and your private information safe in various situations.

Staying Safe On Social Media

  • Don’t post or send private or tax related information anywhere on these types of platforms. Even if you have your social media accounts set to a limited audience under privacy settings, if you are using an open wi-fi network, like at the local coffee shop or in a hotel room, your information can be captured as it goes over that connection.
  • Don’t open or respond to direct messages coming from social media platforms. For example, anybody that can see your public profile on Facebook, can generate a direct message to you, even when they are not listed in your ‘friends’ categories. Opening these messages can often then let this sender begin a conversation with you. Fraudsters can use this new access to try to obtain information from you, which they can use to steal your identity.
  • See our TAS Tax Tips: Keep safe on social media at tax time – Don’t post or message tax info article for more information.

Staying Safe While Using Email, Phone Or On A Website

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National Taxpayer Advocate Objectives Report 2022

National Taxpayer Advocate Objectives Report To Congress 2022

National Taxpayer Advocate Objectives Report To Congress 2022

Systemic Advocacy Objectives describe the objectives TAS will pursue to address systemic issues causing taxpayer burden or harm. Similar to the way Most Serious Problems are identified in the Annual Report to Congress, the National Taxpayer Advocate calls upon a multitude of sources to assist in identifying Systemic Advocacy Objectives including the experience of TAS staff, trends in advocacy efforts and TAS casework, and interactions with practitioners and external stakeholders.

TAS’s Systemic Advocacy Objectives for FY 2022 are:

  1. Improve IRS Recruitment, Hiring, and Retention Strategies
  2. Collaborate With the IRS in the Development of Its Training Strategy to Enhance the Taxpayer Experience
  3. Expand the Functionality of Online Account Services for Taxpayers and Practitioners
  4. Expand Technology Capabilities and Access to Customer Service
  5. Provide Taxpayers a Better Understanding of IRS Processes and Procedures by Promoting Detailed and Timely IRS Transparency
  6. Improve Taxpayer Access to Digital Communication Options and Permit Digital Signatures
  7. Mitigate the Impact of the 2021 Filing Season Challenges and Refund Delays
  8. Minimize Refund Delays for Taxpayers Whose Legitimate Returns Are Delayed by IRS Fraud Filters
  9. Expand Electronic Filing Capabilities
  10. Provide Administrative Appeal Rights to Taxpayers Requesting Abatement and Include Additional Status Information on the Where’s My Amended Return Tool
  11. Analyze Math Errors Attributable to the 2020 Recovery Rebate Credit/Economic Impact Payments to Eliminate Future Recovery Rebate Credit Errors During 2021
  12. Monitor the IRS’s Recovery for the Unemployment Compensation Exclusion
  13. Assist Taxpayers Who Experience Changes Relating to the Child Tax Credit During 2021
  14. Improve Correspondence Audit Communications and Focus on High Default Rates for Taxpayers With Adjusted Gross Incomes Below $50,000
  15. Identify Potential Collection Barriers for Low-Income Taxpayers
  16. Continue Advocacy Efforts to Correct Erroneous Collection Statute Expiration Dates Due to Pending Installment Agreements
  17. Increase Taxpayer Participation in the Offer in Compromise Program
  18. Mitigate the Unintended Effects of the 2020 and 2021 Filing Season Postponements on Timely Filed Refund Claims
  19. Improve Timeliness of Tentative Allowance Refunds During National Emergencies
  20. Advocate for Efficiencies and Additional IRS Resources to Timely Process Individual Taxpayer Identification Number Applications
  21. End Systemic Assessment of International Information Return Penalties That Harm Taxpayers and Burden the IRS
  22. Advocate for Improved Voluntary Disclosure Practice to Reduce Taxpayer Uncertainty and Encourage Participation

TAS Advocacy Objectives: Download 25 Page Report