National Taxpayer Advocate Identifies Priority Issues for Upcoming Year; Reports on Exempt Organization Review Concerns
IR-2013-63, June 26, 2013
WASHINGTON — National Taxpayer Advocate Nina E. Olson today released her statutorily mandated mid-year report to Congress that identifies the priority issues the Taxpayer Advocate Service (TAS) will address during the upcoming fiscal year. The report expresses particular concern about the impact of budget cuts on the IRS’s ability to meet taxpayer needs, the IRS’s unwillingness to issue full refunds to victims of tax return preparer fraud and shortcomings in IRS procedures for assisting victims of tax-related identity theft.
In addition, Olson released a special report examining the IRS’s use of questionable criteria to screen applicants for tax-exempt status. The special report analyzes the sources of the problem and makes preliminary recommendations to address them.
“Today, the IRS is an institution in crisis,” Olson wrote. “In my 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.”
TAS Areas of Focus
The report identifies the priority issues on which the Office of the Taxpayer Advocate will focus during the upcoming fiscal year. The report describes numerous challenges facing the IRS, including:
Relieving the financial harm suffered by victims of tax return preparer fraud.
Conducting adequate oversight of the tax return preparer industry.
Providing effective, timely, and taxpayer-centric relief to victims of identity theft.
Utilizing effective and timely collection alternatives to minimize taxpayer burden while reducing the number and dollar amount of balance-due accounts.
Conducting education and outreach to taxpayers about their responsibilities under the Affordable Care Act.
Resolving erroneous revocations of the tax-exempt status of small § 501(c)(3) organizations and failing to provide them with a pre-revocation administrative appeal.
Establishing less draconian and more reasonable “settlement initiatives” for the millions of taxpayers who have legitimate reasons for overseas bank and financial accounts and whose failure to file reports was merely negligent.
Special Report on Exempt Organization Review Concerns
Is there a fixed percentage that should be used to measure whether an entity is “primarily” engaged in social welfare activities (e.g., 51 percent)?
What factor or factors are controlling? In seeking to measure whether an entity is “primarily” engaged in social welfare activities, one could focus on the percentage of the entity’s expenditures, the percentage of the entity’s time, the percentage of the entity’s email blasts or advertisements or other factors.
If the IRS considers multiple factors, should all factors receive equal weight, and if not, how should the relative weighting be determined?
The National Taxpayer Advocate is required by statute to submit two annual reports to the House Committee on Ways and Means and the Senate Committee on Finance. The statute requires these reports to be submitted directly to the Committees without any prior review or comment from the Commissioner of Internal Revenue, the Secretary of the Treasury, the IRS Oversight Board, any other officer or employee of the Department of the Treasury, or the Office of Management and Budget. The first report is due on June 30 of each year and must identify the objectives of the Office of the Taxpayer Advocate for the fiscal year beginning in that calendar year. The second report, due on December 31 of each year, must identify at least 20 of the most serious problems encountered by taxpayers, discuss the ten tax issues most frequently litigated in the courts, and make administrative and legislative recommendations to resolve taxpayer problems.
About the Taxpayer Advocate Service
The Taxpayer Advocate Service is an independent organization within the IRS. TAS employees help taxpayers who are experiencing financial difficulties, such as not being able to provide necessities like housing, transportation, or food; taxpayers who are seeking help in resolving problems with the IRS; and taxpayers who believe an IRS system or procedure is not working as it should. If you believe you are eligible for TAS assistance, call 1-877–777–4778 (toll-free). For more information, go to www.TaxpayerAdvocate.irs.gov or www.irs.gov/advocate. You can get updates on tax topics at www.facebook.com/YourVoiceAtIRS, Twitter.com/YourVoiceatIRS, and www.youtube.com/TASNTA.
National Taxpayer Advocate’s FY 2014 Objectives Report to Congress & Special Report
Tax Toolkit: www.TaxpayerAdvocate.irs.gov
- IRS lags in program to spot tax refund fraud: watchdog (Reuters, Aug. 26)
- Government effort not stopping tax fraud cases (The Tampa Tribune, Aug. 4, 2013)
- Thank You For Calling the IRS, Please Hold (FOXBusiness, July 11, 2013)
The Time for Tax Reform is Now!
To further the dialogue about tax reform, TAS has established a vehicle to receive taxpayers’ suggestions for tax reform. Please provide your input.
Check back often for updated comments and a new display - coming soon!