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Tag Archive for National Taxpayer Advocate

IRS Publication Error May Have Caused Certain Married Taxpayers Filing Separately To Fail To File Required Tax Returns

TAS’s statutory mission is to resolve problems taxpayers encounter as a result of the way the IRS administers the nation’s tax code. In this blog, I would like to call attention to TAS’s efforts to correct an error in an IRS publication that may have led some taxpayers with a filing requirement to fail to file their returns.

Under section 6012(a) of the Internal Revenue Code (IRC), the filing threshold for married taxpayers filing separate returns from their spouses is the personal exemption amount, which was $4,050 in tax year (TY) 2017. In December 2017, the Tax Cuts and Jobs Act of 2017 (TCJA) suspended the personal exemption for TYs 2018-2025 (effectively reducing it to zero). As a result, taxpayers using this filing status face a filing requirement regardless of whether they worked or earned income in TYs 2018-2025. In light of Congressional intent underlying the TCJA, the IRS provided relief to married taxpayers filing separately by setting the filing requirement at $5. Both the IRS web site and the 2018 Instructions to Form 1040 indicate that a married filing separately taxpayer must file a tax return if the individual’s gross income is at least $5.

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National Taxpayer Advocate: Planning To Travel Outside The U.S. This Year? Don’t Risk A Passport Revocation

National Taxpayer Advocate

The Internal Revenue Service is urging taxpayers to resolve their significant tax debts, $50,000 or more, to avoid putting their passports in jeopardy. If you owe $50,000 or more and haven’t made payment arrangements, please contact the IRS now to avoid travel delays later.

Why is the State Department allowed to limit or revoke my passport due to unpaid taxes?

In December 2015, Congress passed the Fixing America’s Surface Transportation (FAST) Act. That act authorized the IRS to certify to the State Department taxpayers who owe a seriously delinquent tax debt. A seriously delinquent tax debt is an unpaid, legally enforceable federal tax debt totaling more than $50,000 (Please note that this amount is adjusted annually for inflation.) for which a notice of federal tax lien has been filed and all administrative remedies under IRC § 6320 have lapsed or been exhausted, or a levy has been issued. The IRS began certifying these debts to the State Department in 2018. Under the law, the State Department must deny your passport application and may revoke or limit your passport if the IRS has certified you as having a seriously delinquent tax debt. A seriously delinquent tax debt does not include non-tax debts collected by the IRS, such as the FBAR penalty and child support.

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National Taxpayer Advocate Objectives Report Features IRS Responses To Most Serious Problems (Volume 2)

National Taxpayer Advocate

Each December, the National Taxpayer Advocate identifies the Most Serious Problems facing taxpayers and makes recommendations for addressing them in the Annual Report to Congress (ARC). Each June, the National Taxpayer Advocate submits the Objectives Report to Congress, which includes a second volume that contains the IRS’s responses to our recommendations together with our analysis of the IRS’s responses.

As the Acting National Taxpayer Advocate, I believe it is important for taxpayers, tax practitioners, and Members of Congress to see how the IRS responded, and I will highlight a few examples of its responses and related analysis.

  • Most Serious Problem 1 – Tax Law Questions: The IRS has agreed to study the feasibility of returning to its previous practice of answering in-scope tax law questions year-round on the phones.
  • Most Serious Problem 2 – Chief Counsel Transparency: IRS Counsel has agreed to clarify the standards that should be considered when deciding whether legal advice should be issued in a formal memorandum.

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The Taxpayer Roadmap 2019 – A Lifeline For Taxpayers And Tax Professionals

Nina Olson The Taxpayer Roadmap

In the words of a comment made by one of our readers on a previous post on the taxpayer’s journey, “Whatever time and money was spent on this flowchart is some of the best taxpayer dollars ever spent! I am going to pretend my 2018 tax bill went towards this project, which will make me feel so much better about paying my taxes.”

With the road to tax compliance a very complicated one for many, the National Taxpayer Advocate Team spent a considerable amount of time illustrating the taxpayer’s journey from getting answers to tax questions; all the way through audits, appeals, collection and litigation. The road to compliance is complex to navigate and the reason you need a qualified tax expert to guide you through the process. Their stated goal is to expand on the Roadmap to include links in the future to guide you. On behalf of the TaxConnections community of taxpayers and tax professionals, we want to thank Nina Olson and the National Taxpayer Advocate team for an extraordinary job in building The Taxpayer Roadmap. We also want to thank Nina Olson for her outstanding service of 18 years.

TaxConnections Encourages Your Comments Today In Order To Thank National Taxpayer Advocate Nina Olson Who Retires on July 31st 2019. Great job Nina!

View The Taxpayer Roadmap 2019.



The Taxpayers Journey Illustrated On A Map – The Roadmap Every Taxpayer Must See


The National Taxpayer Advocate who works on behalf of U.S. taxpayers recently built a road map of the taxpayers journey. If you ever wondered what a tax professional does for their clients, you should take a close look at this extraordinary map. It is a stunning illustration every taxpayer and tax professional should see.

The map below illustrates, at a very high level, the stages of a taxpayer’s journey, from getting answers to tax law questions, all
the way through audits, appeals, collection, and litigation. It shows the complexity of tax administration, with its connections
and overlaps and repetitions between stages. As you can see from its numerous twists and turns, the road to compliance isn’t
always easy to navigate. But we hope this map helps taxpayers find their way. A project of the Taxpayer Advocate Service.

The Taxpayer Roadmap 2019



The IRS’s Position On The Application Of The Religious Freedom Restoration Act To The Social Security Requirement Under Internal Revenue Code § 24(h)(7) Has The Effect of Denying Child Tax Credit Benefits To The Amish

Nina Olson On Amish

As part of the Tax Cuts and Jobs Act (TCJA) passed in December 2017, the Child Tax Credit (CTC) (Internal Revenue Code (IRC) § 24) was amended to require a Social Security number (SSN) for all qualifying children for whom the credit is being claimed. The stated purpose for the TCJA amendment was to prevent taxpayers who are not eligible to obtain a work-eligible SSN from improperly or fraudulently claiming the CTC or the American Opportunity Tax Credit (AOTC). This requirement raised concerns for some taxpayers—most notably the Amish—some of whom will refrain from obtaining SSNs for their children altogether or for themselves until later in life, due to their deeply held religious beliefs. Prior to this amendment, IRC § 24 only required that a taxpayer identification number (TIN) be provided, and the IRS developed a procedure that allowed Amish taxpayers to claim the dependent exemption under IRC § 151 and the CTC without placing an identifying number on the dependent line of the return. These procedures, described below, have been in place for over 30 years.

After I raised this issue back in the summer of 2018, and after the IRS reversed course several times, IRS Chief Counsel issued program manager technical advice (PMTA) on March 29, 2019, concluding “… the [IRS] need not provide administrative relief for these taxpayers.”  The IRS revised its guidance on April 15, 2019, to reflect the Chief Counsel’s advice and is disallowing the CTC where qualifying children do not have SSNs on the basis of religious beliefs. Under the TCJA, the maximum CTC for 2018 was $2,000 per child. However, without an SSN, the taxpayer can only receive a partial $500 credit allowed for a dependent—a significant reduction of 75 percent.

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The National Taxpayer Advocate’s Remarks On The Role Of Trust and Taxpayer Advocate Service In Fostering Tax Compliance (Part 1)

Nina Olson Final Words Part1

Volume 1, which I present to you today, includes an analysis of the 2019 Filing Season, an assessment of the impact of the recent government shutdown on the Taxpayer Advocate Service (TAS), 12 Areas of Focus, and a discussion of TAS advocacy initiatives, casework, and research studies.

Volume 2, IRS Responses and National Taxpayer Advocate’s Comments Regarding Most Serious Problems Identified in 2018 Annual Report to Congress, and Volume 3, Making the EITC Work for Taxpayers and the Government: Improving Administration and Protecting Taxpayer Rights, will be published next month.

Volume 2 will contain the IRS’s general responses to each of the administrative recommendations we identified in our 2018 Annual Report to Congress. Volume 3 will contain a comprehensive assessment of the Earned Income Tax Credit (EITC) and will make recommendations designed to increase the participation rate of eligible taxpayers and reduce overclaims by ineligible taxpayers.  During the spring, Professor Leslie Book of the Villanova School of Law, a leading EITC expert, served as a “professor in residence” with TAS, and Margot Crandall-Hollick, an EITC expert with the Congressional Research Service, worked with TAS on a detail.  Together with TAS’s EITC experts, including former Low Income Taxpayer Clinic attorneys and researchers, they conducted a broad review of existing EITC research and drafted a comprehensive set of recommendations to assist Congress and the IRS in improving the program.

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Why We Should Repeal The Flora Rule Or Find Another Way To Give Taxpayers Who Cannot Pay The Same Access To Judicial Review As Those Who Can (Part 3 of 3)

Two weeks ago, I discussed how the Flora rule blocks access to judicial review by low income taxpayers and those subject to “assessable penalties.” Last week, I discussed why the policy justification for the Flora rule has faded and why the theoretical ability to petition other courts does not always provide real access to judicial review. In this week’s blog, I discuss the solutions that policymakers should consider. More details are available in my 2018 Annual Report to Congress.

Repeal The Flora Rule

Because Flora is obsolete, I agree with those who have suggested the Flora rule should be repealed (e.g., Steve Johnson here on p. 271). Such a repeal would allow taxpayers to file suit in district court or the U.S. Court of Federal Claims after paying a small fraction of the liability. If Congress prefers a more tailored approach, however, it should consider one or more of the following options:

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Why We Should Repeal The Flora Rule Or Find Another Way To Give Taxpayers Who Cannot Pay The Same Access To Judicial Review As Those Who Can (Part 2 of 3)

Nina Olson- Judicial Review Part 2

In the previous blog post, I discussed how the Flora rule harms low income taxpayers who were not part of the tax system when it was established and sometimes eliminates judicial review for those subject to “assessable penalties,” most of which also did not exist at the time. This week, I discuss the policy justification for the Flora rule, why it has faded, and why the theoretical ability to petition other courts does not provide real access to judicial review for some taxpayers.

The Justification For The Flora Rule Has Faded

As we discussed last week, in 1958 in Flora I and again in 1960 in Flora II, the U.S. Supreme Court held that taxpayers must have “fully paid” an assessment before filing suit in U.S. district court or the U.S. Court of Federal Claims. In Flora I the Court said a policy basis for the full payment rule was to protect the “public purse” and cited dicta in earlier decisions, such as Cheatham, which was decided in 1875. This dictum said the rule was needed to protect the very “existence of government” from a “hostile judiciary.” Although the Flora decisions did not repeat the “existence of government” rationale, it relied heavily on CheathamCheatham is cited seven times in Flora I and 20 times in Flora II.

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Why We Should Repeal The Flora Rule Or Find Another Way To Give Taxpayers Who Cannot Pay The Same Access To Judicial Review As Those Who Can (Part 1 of 3)

Nina Olson Flora Rule

Taxpayers have the right to appeal a decision of the IRS in an independent forum. Consistent with this right, in the 2018 Annual Report to Congress (ARC) I recommended legislation to provide all taxpayers with a realistic opportunity for judicial review of IRS determinations.

The so-called “Flora rule”—named after a Supreme Court case decided in 1960—limits access to judicial review by those who cannot “fully pay” what the IRS says they owe. In this blog, I explain how the rule is obsolete and harms low income taxpayers who were not part of the tax system in 1960. I also explain how the rule sometimes eliminates judicial review for those subject to “assessable penalties,” most of which did not exist in 1960.

What is the Flora rule?

In general, 28 U.S.C. § 1346(a)(1) authorizes a taxpayer to file suit in a U.S. district court or the U.S. Court of Federal Claims to recover “any … tax,” “any penalty,” or “any sum.”  The statute places no explicit limits on how much the taxpayer must have paid before filing suit. In 1958 in Flora I and again in 1960 in Flora II, however, the U.S. Supreme Court held that taxpayers must have “fully paid” an assessment (called the “Flora” or “full payment” rule) before doing so.
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The IRS Is Not Doing Enough To Protect Taxpayers Facing Economic Hardship

The Taxpayer Bill of Rights (TBOR) grants taxpayers the rights to privacy and to a fair and just tax system. The Internal Revenue Service’s official explanation of these rights, in Publication 1, states in part: “Taxpayers have the right to expect that any IRS …enforcement action will comply with the law and be no more intrusive than necessary,” and “to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely.”

At the time the TBOR was codified in IRC § 7803(a), Congress had already created statutory remedies for violations of these rights, including protections to prevent individual taxpayers from experiencing economic hardship while owing a tax liability. For instance, under IRC § 6343(a)(1)(D), the IRS must release a levy if it determines that the levy is creating an economic hardship for the taxpayer. Treasury regulation § 301.6343-1(b)(4) explains that an economic hardship occurs when collection action will “cause an individual taxpayer to be unable to pay his or her reasonable basic living expenses.”

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IRS Examinations – The IRS Should Promote Voluntary Compliance And Minimize Taxpayer Burden In The Selection And Conduct Of Audits

National Taxpayer Advocate

In February of 2019, I released the 2018 Annual Report To Congress in which, among other things, I discuss the influence of tax audits on taxpayers’ attitudes and perceptions, and specifically focus on the three primary types of traditional or “real” IRS audits, which can occur through correspondence, at the taxpayer’s home or business, or at an IRS office. In my 2017 Annual Report to Congress and a related blog post around nine months ago, I described IRS audit rates and the distinction between “real” and “unreal” audits. This blog, however, provides an overview of traditional or “real” audit programs, along with some of my findings.

Why are IRS audits important?

The IRS is authorized to examine books, papers, records, or other data and take testimony to determine the correctness of any return and the liability of any person for tax under Internal Revenue Code (IRC) § 7602(a). The IRS’s primary purpose in selecting tax returns for examination or audit is to promote the highest degree of voluntary compliance. IRS audits are intended to detect and correct noncompliance of audited taxpayers, as well as create an environment to encourage non-audited taxpayers to comply voluntarily.

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