National Taxpayer Advocate Comments On The IRS

IRS Building in WashingtonThe mid-year report of the IRS National Taxpayer Advocate, Nina Olson, addresses several key problem areas with special note on challenges for the IRS and a special supplement on the recent 501(c)(4) controversy.  Her observations on the IRS seem spot on to me. She states:

“Over the last few months, the Internal Revenue Service has been the center of public attention for several reasons, most notably its scrutiny of politically active social welfare organizations seeking recognition as tax-exempt entities. The public attention to these recent events has in many ways reinforced many taxpayers’ preconceived perceptions of the IRS as an agency that treats taxpayers unfairly. While all this is grievous enough and in fact calamitous for public respect for and compliance with the tax laws (because once lost, trust takes a very long time to be regained), these events are symptoms of broader problems festering at the IRS.”

“There is much that is good about the IRS – indeed, the National Taxpayer Advocate (NTA) has the deepest respect for the agency and its workforce, even when she vigorously disagrees with the IRS’s actions or policies. But today, the IRS is an institution in crisis. In the NTA’s view, however, the real crisis is not the one generating headlines. The real crisis facing the IRS – and therefore taxpayers – is a radically transformed mission coupled with inadequate funding to accomplish that mission. As a consequence of this crisis, the IRS gives limited consideration to taxpayer rights or fundamental tax administration principles as it struggles to get its job done.”

She suggests that one way to improve relations between the public and the IRS is to have a true taxpayer bill of rights that states general principles rather than specific items we currently have in TBOR that have been included in earlier tax laws.  The ten categories of rights she suggests are, the right:

1.   To be informed.
2.   To be assisted.
3.   To be heard.
4.   To pay no more than the correct amount of tax.
5.   Of appeal.
6.   To certainty.
7.   To privacy.
8.   To confidentiality.
9.   To representation.
10. To a fair and just tax system.

She notes that some 501(c)(3) and (c)(4) applicants had perhaps eight of the above ten rights violated.

The mid-year objectives report includes a 3-step plan to get “the IRS on the right track.” These steps are:

1.  Enact an enforceable TBOR and train IRS “employees to analyze their actions (and inactions) so that IRS initiatives conform with these principles.”
2.  Fund the IRS to enable it to meets its “dual mission of revenue collection and benefits administration.”
3.  “Restore training and training-related travel budgets to levels that ensure IRS employees have the education and professional skills they need to administer our complex tax system and do so in a manner that respects taxpayers rights.”

And there is more in this 170-page report. I encourage you to at least skim it. The 14 areas of focus are listed as follows:

•  “The IRS Harms Taxpayers by Refusing to Issue Refunds to Some Victims of Return Preparer Fraud
•  The Current Limited Oversight of Return Preparers Makes Taxpayers Vulnerable to Unscrupulous or Incompetent Preparers
•  As the IRS Adopts a Specialized Approach to Identity Theft Victim Assistance, Concerns About Complete and Timely Account Resolution Remain
•  Implementation of the IRS’s Return Review Program Is at Extreme Risk, Which Could Cause Significant Harm and Cost
•  Collection Update: The IRS’s Tepid Approach to Implementing Recent Changes in Collection Policies Has Limited Taxpayer Access to Important Collection Options
•  The TAS Collection Case Review Yielded Valuable Insights on How TAS Can Improve Advocacy in Collection Cases
•  TAS Prepares for Implementation of Health Care Provisions
•  The IRS has Revoked the Exempt Status of Thousands of Organizations in Error, Causing Significant Harm to Taxpayers
•  TAS Works to Ensure Taxpayers Know Their Rights and Obligations
•  IRS Offshore Voluntary Disclosure Programs Continue to Burden “Benign Actors” and Damage IRS Credibility
•  Shared Jurisdiction and Lack of Coordination between IRS and FinCEN Burdens Taxpayers and Undermines Compliance Efforts
•  International Taxpayer Service Initiatives Continue but Need a More Formal Structure
•  IRS ITIN Policy Changes Make Return Filing Difficult and Frustrating
•  Cuts to IRS Tax Forums Mean Lost Opportunities”

What do you think? What would you suggest for improving federal level tax administration?

Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.

Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.

Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.

Prior to joining SJSU, Annette was with Ernst & Young and the IRS.

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3 comments on “National Taxpayer Advocate Comments On The IRS

  • Annette, the one real problem at the IRS is that upper management, mostly the executives, have been ineffective in managing and/or monitoring the programs they are responsible for and that has been going on for many years! 40 years that I’m aware of. CW.

  • Here is what I have been dealing with just to get my amended tax return. The IRS messed up, I need the money, and have been spending large amounts of time to try and get it. The bureaucracy and lack of accountability is infuriating. What other business on the planet can operate like this and still be in business?


    After waiting 12 weeks without receiving my amended tax return (per instructions from the last time I called), I called 1-800-829-0582 Ex 623. (waited for 44 minutes on the line)

    Mrs. Geldard (0621121) answered.

    She confirmed that my amended return was received on 3/29/2013.
    She said the return went into processing and there were no additional notes on its status.
    She asked if I had received any notification in the mail of its status. I informed her twice that I had not.

    She informed me that her only course of action was to file a reference request that could take up to 30 days before any additional information would be received.

    I instructed her to make a note that as soon as someone knew of the status of my return, that they call me asap (any time) to inform me of its status.

    I asked to speak to a superior. She would not put me through to anyone else.


    Called 1-800-829-0582 Ex 623 to make sure the reference request was placed. (waited 35 minutes).

    Mrs. Cantrel (0910144)

    Referral sent to person handling my return. She confirmed that it could take up to 30 days.

    Informing her that 30 days wasn’t acceptable, I pushed her for another option.
    She informed me that after 30 days I would be assigned a tax payer advocate.
    I informed her that I cannot wait 30 days for the return because I need the money for a downpayment on a house.

    She went ahead and put in a request that I be assigned a tax payer advocate who will be in touch within the next 7 days. (Mrs. Cantrel could not tell me if that was 7 days or 7 business days)


    Called 1-800-829-0582 Ex 623 to see what the status of my tax payor advocate is since it has been 7 days. (waited 30 minutes)

    Ms. Lantier (0571445)

    She said that a referral request had been submitted.
    Could not confirm that a taxpayer advocate was contacted to call me.
    Said that it had been 14 weeks since my file was received, but stated that the next course of action would take up to 30 days to complete.
    I informed her that I could not wait 30 days because I needed the money for a down payment on a house.
    She was very sympathetic to my situation.
    Informed me that I would receive interest on my return as of April 15, 2013 on the amount owed me.
    She gave me the direct number to the Taxpayer advocate line (877-777-4778)

    Called the Taxpayer advocate line (877-777-4778) Got right through. No wait.

    Mr. Dukes (0730899)

    He informed me that processing of my file was closed. He stated that there were no notes as to why.
    He informed me that he would put information in my file to have a taxpayer advocate call me by end of day July 8.
    If I do not hear from an advocate, he instructed me to call the taxpayer advocate line and ask for 2 pieces of information:

    Case file #
    Advocates name and contact information.
    He also stated that I needed the return by July 15 for downpayment on a house. If the money is not received, I would could be without a home.


    Mrs. Thomas (1000150378) (Waited 33 minutes)

    Case file # XXXXXXX
    Advocates name and contact information. Ms. Padkowski

    Called Ms. Padkowski, got voice mail. Left a message.
    Called back on 866 number and Ms. Padkowski picked up. She just got my file and is going to review and call me back first thing in the morning.

    Sent notes about my case via fax to Ms. Padkowski

    Faxed over home contract, copy of amended 1040 and K1. Ms. Padkowski said it would be faster for me to send the files than to have to get them from the IRS.

    Called to confirm receipt of forms. Ms. Padkowski said she got them and has them sent to where they need to go for attention.
    Ms. Padkowski informed me that someone will be assigned to figuring out my returns within 3 days, but they will not be addressed for 2 weeks.
    I told Ms. Padkowski I am going to call her on Friday, July 19 to check back in.

    Called Ms. Padkowski and left a message. She is not in on Fridays.

    Ms. Padkowski called, I missed her message. She said the original tax return had posted.
    Called Ms. Padkowski and left 3 messages to try to get more information.

    Called Ms. Padkowski to get an update. She said the amended return was posted and we were just waiting for the check to be issued. She said to check back on Monday, 7/29 to see if the check has been issued.

    Called 800-829-0582 to get an update. (waited 43 minutes)
    Was told that the adjustment to my tax return was made on Monday, July 22. But it will take 3 weeks for the check to be issued (August 12) because the forms had to go through internal quality control at the IRS. Was informed that there will be interest added to the check, but they could not say how much until the return is posted.

    This is an actual example of what I am sure many are going through. No one should have to work this hard to get the return that is owed them. i hope the IRS gets there stuff together. I would be embarrassed to be a part of the system that is this dysfunctional.

  • 7/25/2013
    Got a letter from the IRS stating that my account has been adjusted as I requested (I assume this means that my amended tax return was accepted).
    It also stated that I will get my refund in four to six weeks.
    I need the check prior to 4-6 weeks and have followed EVERY one of the IRS’s ridiculous procedures. They sent a letter saying the amended return was accepted. You would think there would be a way to expedite the return since the IRS messed up.

    Called Ms. Padkowski to discuss. Left a message. Apparently the Tax Payer Advocates are so overwhelmed with cases that they are too busy to take calls, which renders the whole reason they were established in the first place as obsolete.

    Called the number provided on the letter to answer questions 1-800-829-8374. Was redirected to 1-800-829-1954. Input my SS#, my filing status and my refund amount and the automated voice said it could not provide information on my tax return.

    More Government red tape, no more answers, no tax return check.

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