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MSP #4: ACCESS TO APPEALS

The IRS Should Permanently Assign at Least One Appeals Officer and Settlement Officer in Each State, the District of Columbia, and Puerto Rico

TAS Recommendations and IRS Responses

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1.

TAS RECOMMENDATION #4-1

Expand Appeals duty locations in a way that ensures at least one Appeals Officer and one Settlement Officer are stationed within every state, the District of Columbia, and Puerto Rico.

IRS RESPONSE TO RECOMMENDATION: The use of state boundaries to apportion the administrative appeal resources in our Federal tax system in an era of increasing complexity of tax issues and increasing use of and comfort with virtual technologies would be arbitrary. Matching the expertise of the Appeals employee to the issue(s) presented is more critical to settling a case properly than the physical presence of two employees in each state, who could possess insufficient expertise to cover all issues in the case.  Further, two Appeals employees could not handle effectively the broad scope of issues arising in a some states thus, circuit riding would still be required in many cases.  Appeals Officers are familiar with the laws of multiple states when necessary to determine federal tax consequences (e.g., definition of alimony), which enables them to cover larger geographic areas.  While regional economics are often relevant to tax administration, a state based approach does not, among other things, account for multiple jurisdictions within a single local economy (e.g., Kansas City or Texarkana).   Appeals regularly circuit rides to areas where there is no permanent Appeals presence, conserving taxpayer dollars by scheduling as many convenient meeting dates and locations as possible during the travel.  It is not a good use of taxpayer money to add two Appeals Officers in both Vermont and Rhode Island where nearly 2.5 million residents already live within 200 miles of an Appeals office, while well over 10 million residents in the western states live more than 200 miles from the nearest office.  We note that this issue was also raised in the NTA’s 2009 report to Congress and the recommendation was rejected at that time for substantially similar reasons.

CORRECTIVE ACTION: N/A

TAS RESPONSE: The National Taxpayer Advocate has been recommending for years that the IRS station at least one Appeals Officer and one Settlement Officer within every state, the District of Columbia, and Puerto Rico.  Appeals has steadfastly refused to implement this recommendation and provides a number of reasons for its refusal.  This includes the contradictory notions that, on the one hand, Appeals and Settlement Officers may lack the expertise to handle all or most of the cases arising within a particular state; and on the other hand, circuit riding is feasible because these same Officers are somehow conversant enough with the underlying state law in multiple jurisdictions to resolve any federal tax issues contingent on the interpretation of these wide ranging state laws.

In the Most Serious Problem, TAS provides evidence that the ability to interact on a face-to-face basis with the IRS has a significant effect on taxpayer perceptions and satisfaction.  The National Taxpayer Advocate does not contend a single Appeals Officer and Settlement Officer in every state, the District of Columbia and Puerto Rico would be sufficient to provide the physical availability, timely access, and understanding of local issues reasonably required to meaningfully furnish taxpayers with the right to appeal an IRS decision in an independent forum.  Nevertheless, such an Appeals presence would be a good start.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

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2.

TAS RECOMMENDATION #4-2

Begin systematically collecting information allowing for a more precise analysis of the timeliness and fairness of Appeals conferences conducted through circuit riding both in states without a permanent Appeals presence and in states where Appeals field offices are augmented by circuit riding.

IRS RESPONSE TO RECOMMENDATION: Appeals already has a process measure in place for recording the time from when a case is assigned in Appeals to when a conference is held.  This time span is reported for all work streams.  The fairness of an Appeals hearing cannot be measured objectively, but we use the Appeals Customer Satisfaction Survey Report to gauge taxpayers’ perceptions of fairness.

CORRECTIVE ACTION: N/A

TAS RESPONSE: As part of the research process for this Most Serious Problem, TAS analyzed Appeals’ claims that its policy of circuit riding to those states without a permanent Appeals presence resulted in a fair and accessible appeals process.  Appeals’ position, however, was, and continues to be, based on unsubstantiated assertions.  To date, Appeals has rejected TAS’s recommendation to develop data regarding the effectiveness of circuit riding, that can be used to evaluate the validity of Appeals’ current approach.  Even Appeals’ Customer Satisfaction Survey does not examine the views of taxpayers regarding the fairness and availability of circuit riding.

Appeals has essentially said it disregarded the National Taxpayer Advocate’s recommendations made as part of the 2009 Annual Report to Congress and will continue to ignore her recommendations made as part of the 2014 Annual Report to Congress.  This response is unacceptable.  Appeals should heed the data that clearly demonstrates circuit-riding is not meeting the needs of U.S. taxpayers and take steps to remedy the ever-dwindling geographic coverage of Appeals.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

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