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IRS Still Faces Major Service, Funding Challenges: Taxpayer Advocate

Few people are aware of her, but Nina Olson is our national taxpayer advocate, charged with regularly making recommendations to improve the U.S. tax system. She has recently sounded some alarms, saying, "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."

Every year, Olson urges Congress to make some much-needed changes to the tax system, and whether or not the lawmakers listen to her, we certainly can, and we can then urge our representatives to heed her calls.

For example, in the wake of the recent Tea-Party-related tax kerfuffle, Olson issued a special report on IRS criteria used to determine which entities receive tax-exempt status. She noted:

To promote voluntary compliance with the tax laws, the IRS must be impartial both in fact and in appearance. The revelation that the IRS used 'tea party' and similar labels to select tax-exemption applicants for further review, even if intended solely as a workload management tool, has created the appearance that the IRS was not impartial. It is imperative the IRS move quickly to regain the public's trust and take steps to prevent this kind of incident from happening again.

In her analysis, the existing criteria that IRS employees must apply are rather vague.

2014 objectives
For 2014, Olson offered a long list of taxation issues and objectives, summarized in a handy infographic, and a detailed report. Here are just a few of her many concerns:

  • She cites the scope of tax-preparer fraud, and while calling for "adequate oversight" of tax-return preparers, she laments that victims are not always issued replacement refunds. A taxpayer's refund check is generally reissued if the scammer stole a paper check, but not if the offender used a fraudulent direct-deposit account. (Cases of identity theft also result in replacement refunds for taxpayers.)
  • In discussing how the IRS does not have sufficient funding to fulfill all obligations, she offered some eye-popping numbers: In fiscal year 2012, the IRS collected $2.52 trillion in taxes on a budget of $11.8 billion. In other words, for every dollar allocated to the IRS, it delivered $214 in tax revenue. Given that kind of return, it certainly seems sensible to give the IRS more funding to help it collect more of what is due. 
  • Olson also pointed out that taxpayers are receiving worse service than they did almost a decade ago. In 2004, she noted, the average wait time for a call to the IRS was three minutes. In 2012, that had ballooned to 17 minutes. Not all calls even get answered -- 87% were answered in 2004, while that number fell to just 68% in 2012.

These kinds of alarming details indeed point to an agency in crisis, though solutions exist and have been detailed.

Taxpayer Bill of Rights
Finally, know that Olson has proposed a Taxpayer Bill of Rights with 10 categories that could be used as a framework by which various IRS policies and actions could be measured:

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

Stay tuned for more from Olson and her team. At the end of every year, she is required to submit a report that identifies at least 20 of the most serious problems encountered by taxpayers, discusses the 10 tax issues that are most frequently litigated, and offers administrative and legislative recommendations to resolve taxpayer problems.

If you feel strongly about any of the issues she addresses, contact your representatives in Washington and let them know!

She Has Even Studied Obamacare
Taxpayer Advocate Nina Olson has been looking at the Obamacare rollout to get a handle on its implications for taxpayers. You should learn more about it, as well. In only minutes, you can learn the critical facts you need to know in a special free report called "Everything You Need to Know About Obamacare." But don't hesitate; because it's not often that we release a free guide containing this much information and money-making advice. Please click here to access your free copy.

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  • Report this Comment On November 05, 2013, at 1:00 PM, Cyberoid wrote:

    Olson is a part of the problem. It's true that the number of small taxpayers who have problems with the IRS is absolutely larger than the number of large taxpayers who do -- how could it be otherwise? It's more often the case that the IRS goes out of its way to accommodate large taxpayers, however, which costs the US Treasury more and ultimately hurts small taxpayers on a regular basis. We hear more about the petty abuses, because the Big Fish swim safely away. Olson's constant bleetings only obfuscate this truth.

    I'm an IRS Whistleblower with a case in US Tax Court revolving about special favors granted by the IRS to a large tax-exempt corporate taxpayer through the auspices of its equally large global law firm. The large taxpayer was not only fraudulently tax-exempt, I allege, but also committed several infractions in its home jurisdiction (D.C.) and out and out felonies in its dealings overseas.

    Yet the IRS expedited and granted its application for tax exempt status in a record two weeks. The only explanation for such hospitality on the part of the IRS (and its subsequent looking the other way) was the taxpayer's choice of counsel -- one of the world's largest and most pragmatic law firms -- and its political connections.

    The IRS still can't and won't account for its apparent complicity in alleged tax fraud -- no audit has ever transpired, and no investigation was begun until after the taxpayer, having carried out its money-laundering and forbidden political functions, ceased operations ... well after the money trail had grown cold. Instead, in court, it's taken the position of defending the privacy of the alleged perpetrators.

    Like Olson, I hope small taxpayers have it easier. As a small taxpayer, I've been audited. (I found it an informative process; but then, I had nothing to conceal.) It hardly matters if the IRS lightens up a little on small fry if simultaneously it's operating as a bank, giving a relatively few big customers special deals at the expense of millions of small ones. We small "customers" -- shall we say, "citizens? -- are the ones called upon to make up the difference between what the big guys owe and what they actually pay. It costs all of us a lot more than the minor abuses Olson cites.

    So what does the Taxpayer Advocate have to say about that? Or can she not make distinctions between big and small, fairness and unfairness? What's her charter? What's her sense of justice?

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