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FY22 Goal 2: Protect Taxpayer Rights and Reduce Burden

Organizational Objectives

1
1.

Partner with the Taxpayer Experience Office and others to propose an expanded range of improved options for accessing IRS services and information using digital communications.

Status: Closed
Completion Date: 12/31/2021

Quarterly Update:
1st Quarter: This advocacy effort is being addressed in numerous ways including; the Most Serious Problem (MSP), “Digital Communication Tools Are Too Limited, Making Communication With the IRS Unnecessarily Difficult” and a Legislative Recommendation (LR) in the 2021 Annual Report to Congress (ARC), participation in sessions to identify business needs and help business requirements for tools to enable the delivery of externally facing IRS services across all channels while protecting taxpayer data from fraudsters and identity thieves, participation in the Omni channel Integrated Project Team (IPT) to develop strategies to secure user access to the right IRS services, and completion of the update of a Memorandum to implement a deviation allowing taxpayers and representatives to use electronic or digital signatures. All planned activities for this objective have been completed.

2
2.

Work with the IRS to implement enhanced e-filing and digital signature options to improve the taxpayer experience.

Status: Closed
Completion Date: 03/31/2022

Quarterly Update:
2nd Quarter: 
The National Taxpayer Advocate advocated for the prioritization of the e-filing of forms, schedules, and attachments with the identification of the Most Serious Problem (MSP) “E-Filing Barriers: Electronic Filing Barriers Increase Taxpayer Burden, Cause Processing Delays, and Waste IRS Resources”. All planned activities for this objective have been completed.

1st Quarter: The Taxpayer Advocate Service (TAS) is addressing this advocacy effort in multiple methods such as; inclusion in the 2021 Annual Report to Congress (ARC) and completion of the digital forms expansion with the release of the memo titled “Temporary Deviation from Handwritten Signature Requirement for Limited List of Tax Forms.” Further, our support and advocacy through the collaborative effort with IRS assisted in the release of the Deputy Commissioner, Services and Enforcement (DCSE) memo of 11/18/21 “Temporary Deviation from Handwritten Signature Requirement for Limited List of Tax Forms.” Additional details were published in the Annual Report to Congress (ARC) Most Serious Problem (MSP) “E-Filing Barriers: Electronic Filing Barriers Increase Taxpayer Burden, Cause Processing Delays, and Waste IRS Resources.”

 

3
3.

Strategize with the IRS to improve communications with taxpayers or improve processes for those selected for a correspondence audit in an effort to reduce default rates.

Status: Closed
Completion Date: 12/31/2021

Quarterly Update:
1st Quarter: 
The Taxpayer Advocate Service (TAS) established a dialogue with IRS and collaborated jointly on these issues. Also, the Annual Report to Congress (ARC) addressed this in the Most Serious Problems (MSPs) titled “Correspondence Audits: Low-Income Taxpayers Encounter Communication Barriers That Hinder Audit Resolution, Leading to Increased Burdens and Downstream Consequences for Taxpayers, the IRS, TAS, and the Tax Court” and “Digital Communication Tools Are Too Limited, Making Communications With the IRS Unnecessarily Difficult.” All planned activities for this objective have been completed.

4
4.

Work with the IRS to identify and implement improvements in collection practices and communication, specifically for low-income taxpayers.

Status: Open
Completion Date: TBD

Quarterly Update:
2nd Quarter:
​The Taxpayer Advocate Service (TAS) solicited input from the Low Income Taxpayer Clinics (LITCs) regarding the difficulties they encounter when using the IRS’ allowable expenses to determine a taxpayer’s ability to pay.  Also, TAS Research is working with the IRS offer in compromise (OIC) unit to establish a pilot testing the effectiveness of soliciting OICs from taxpayers with defaulted installment agreements and offset tax refunds, and where the TAS algorithm indicates the taxpayer is unable to pay toward the unpaid tax delinquency.  The extensive financial evaluation occurring with OIC submissions will provide additional data to measure the effectiveness of the TAS economic hardship algorithm.

1st Quarter: The Taxpayer Advocate Service (TAS) has implemented several activities to improve collection practices and communication provided by IRS, specifically for low-income taxpayers including;

Working with IRS so they no longer offset, or recoup, refunds for the calendar year in which an Offer in Compromise (OIC) is accepted and systemic offset of overpayments will continue before the OIC acceptance date. For taxpayers who had submitted an OIC, the offset bypass refund (OBR) remedy was unavailable to them and the IRS retained the refunds shown on their tax returns for the calendar year when IRS accepted the OIC. Under the new procedures, the IRS is allowing qualifying taxpayers experiencing financial hardship to seek OBRs while their OICs are pending the IRS’s consideration and these individuals will be able to retain their tax refunds if they meet the criteria in the Internal Revenue Manual (IRM).

Working with the IRS on various communications to taxpayers including revising Notice CP (Computer Paragraph) 15 and any other correspondence to taxpayers that in the IRS’s view constitutes “an opportunity to dispute such liability” for purposes of IRC § 6330(c)(2)(B). The revisions will include detailed information about taxpayers’ rights and consequences of an administrative appeal, explain the notice constitutes their only “opportunity to dispute” the liability, and explain the taxpayer will not be permitted to dispute the merits of the liability at a future Collection Due Process (CDP) hearing or before the U.S. Tax Court.

Proposing through the Annual Report to Congress (ARC) Collections Most Serious Problems (MSP) administrative recommendations including, allowing the taxpayer’s current financial situation to be considered instead of the income listed on the most recent tax return and adopting procedures that allow the IRS to consider changes in taxpayers’ circumstances when determining the applicable Installment Agreement (IA) user fee, similar to procedures in place for considering whether a taxpayer qualifies for an Offer in Compromise (OIC) fee waiver.  TAS is also advocating for taxpayers to prevent undue hardship for those waiting for waiver consideration, as well as for any taxpayer where the user fee is more than their agreed upon regular payment by proposing an administrative recommendation to change IAs to incorporate user fees into the agreed-upon payments over the life of the agreement rather than requiring taxpayers to pay the user fee in the first month.

Discussing with the Small Business/Self Employed (SB/SE) division how the IRS uses allowable living expenses including discussing the importance of either implementing an algorithm to detect taxpayers at risk of their Installment Agreements (IAs) causing economic hardship or conducting more research to further perfect the TAS algorithm in identifying taxpayers where the IA would likely cause economic hardship.

5
5.

Continue to work with the IRS to resolve the issues contributing to erroneous Collection Statute Expiration Dates (CSEDs) resulting from unreversed pending Installment Agreements (IAs) to prevent collections after the statutory period of limitation on collection has lapsed.

Status: Open
Completion Date: TBD

Quarterly Update:
2nd Quarter:
Two activities under this objective remain open during the second quarter and we have continued to engage IRS on making certain erroneous Collection Statute Expiration Dates (CSEDs) are a priority. During the second quarter, IRS informed us the calculator is on hold but we will continue to monitor and work with IRS to activate the project in Fiscal Year (FY) 2022. Also, during the second quarter, we continued monitoring the progress of CSED corrections and IRS’ Small Business/Self Employed (SB/SE) continued correcting cases with erroneous CSEDs, with payments not barred by the refund statute, and found they had not collected any funds after the CSEDs expired. We plan to follow up in the third quarter and make certain all cases were corrected and, where appropriate, that any payments collected are returned to taxpayers.

1st Quarter: The Taxpayer Advocate Service (TAS) has initiated several activities and completed others to work with the IRS to resolve the issues contributing to erroneous Collection Statute Expiration Dates (CSEDs) including providing outreach and training on five separate dates from September 2021 through December 2021. We also collaborated with IRS to include Collection Statute Expiration Dates (CSED) in Continuing Professional Education (CPE) courses for collection employees and confirmed the changes with IRS’ Human Capital Office (HCO) Technology Enhanced Learning (TEL) who agreed to develop and deliver training on pending Installment Agreement (IA) CSED during Fiscal Year (FY) 2022. Further, we made language change recommendations to Publications 594 and 1660 to raise awareness of unreversed/unresolved pending Installment Agreements (IAs) contribution to miscalculated/erroneous CSEDs.

We continue monitoring IRS’ implementation of the Integrated Automation Technology (IAT) Collection Statue Expiration Date (CSED) Calculator Tool and the proposed program changes through Unified Work Requests (UWRs) to further prevent erroneous CSEDs. Currently, the IAT pilot was initially postponed by IRS but it has been rescheduled to begin on June 6, 2022 with an estimated deployment of September 5, 2022. We also provided IRS with potential program changes to prevent erroneous CSEDs, UWR # 243945 to be implemented January 2022 – freeze (unpostable) account when a pending Installment Agreement (IA) is already on the account, and met with Integrated Collection System (ICS) regarding 5 UWRs that will be implemented in 2023.

We continue to monitor cases with incorrect Collection Statue Expiration Dates (CSEDs) to make sure the IRS has corrected them through meetings with IRS and providing potential solutions to resolve any problems. Also, TAS will continue to participate in executive level meetings with Small Business/Self Employed until erroneous CSEDs are corrected.  Recently, IRS has been working on new data analysis to analyze and model TAS’s data results of incorrect CSEDs with the goal to prioritizing and correct cases before returning any applicable payments.  IRS will work on long term preventive measures that would identify erroneous CSEDs on an ongoing basis and correct them.

6
6.

Provide recommendations to improve timely processing of Individual Taxpayer Identification Number (ITIN) applications and associated tax returns and promote communications and education for the resident alien community.

Status: Open
Completion Date: TBD

Quarterly Update:
2nd Quarter:
The Taxpayer Advocate Service (TAS) continues to advocate for sufficient staffing to timely process Form W-7, Application for IRS Individual Taxpayer Identification Number (ITIN). Additional updates will be available later this fiscal year.

1st Quarter: The Taxpayer Advocate Service (TAS) continues to advocate for the appropriate staffing to process Form W-7, Application for IRS Individual Taxpayer Identification Number (ITIN). Our advocacy on this issue is related to our advocacy efforts regarding increasing IRS staffing and improving IRS’s ability to timely process taxpayer correspondence and documents as noted in the National Taxpayer Advocate (NTA) blogs. We continually monitor the record backlog of unassigned Form W-7 inventory during the COVID-19 pandemic and work with IRS to assess the impact of extended overtime. Also, we identify Individual Taxpayer Identification Number (ITIN) processing procedures that delay or deny the assignments of ITINs and provide recommendations to IRS to improve their timeliness. We have incorporated legislative changes that extended benefits to ITIN holders and negotiated updates to the Internal Revenue Manual (IRM) to incorporate simplified return procedures to expand eligibility for the 2021 advance child tax credit payments.

As part of this objective, we have encouraged the adoption of new measures for Certified Acceptance Agents (CAAs) to facilitate documentation requirements and expedite ITIN processing, such as permitting CAAs to authenticate documentation presented in virtual conferences and continue to advocate for the IRS to develop and implement a procedure that allows all applicants to apply for an ITIN throughout the year and submit alternative proof of a filing requirement other than an annual tax return. Further, we included this issue in the Annual Report to Congress (ARC) Most Serious Problem (MSP) process through the “Electronic Filing Barriers Increase Taxpayer Burden, Cause Processing Delays, and Waste IRS Resources” MSP.

7
7.

Work with the IRS to end systemic assessment of International Information Return (IIR) penalties and replace that system with an improved program.

Status: Open
Completion Date: TBD

Quarterly Update:
2nd Quarter:
The National Taxpayer Advocate (NTA) continued to work collaboratively with IRS to negotiate better processes, policies, and impacts of penalty notices and changes relating to taxpayer rights.

1st Quarter: The Taxpayer Advocate Service (TAS) worked collaboratively with the IRS to end the systemic assessment of International Information Return (IIR) penalties and replace the system with a better program by; recommending IRS send its taxpayers a proposed penalty notice so they can provide mitigating evidence such as reasonable cause or the First Time Abatement (FTA) relief, recommending IRS give taxpayers 60 days to respond to proposed penalty notices and give IRS employees time to review and consider reasonable cause relief, and advocating for IRS to reinstitute a penalty-free voluntary disclosure program (VDP) where taxpayers are encouraged to come forward, file delinquent information returns, and be compliant for future years.

8
8.

Work with the IRS to gain more functionality for taxpayer's online accounts, improve the authentication process and prioritizing a tax professional account for their individual clients.

Status: Open
Completion Date: TBD

Quarterly Update:
2nd Quarter:
Taxpayer Advocate Service (TAS) began preparing to hold focus groups at the IRS tax forums later this summer to help determine taxpayer needs. Through our collaborations with IRS’ Online Services (OLS) function, we developed a moderator’s guide to discuss both desired online account features and secure access options. Further, we developed and tested a data collection instrument to document the account access requirements for various state and foreign tax agencies.

1st Quarter: The Taxpayer Advocate Service (TAS) is working with IRS to gain more functionality for taxpayer’s online accounts, improve the authentication process, and prioritize a tax professional account for their individual clients. We drafted a project plan to study what online account features taxpayers want and how best to secure access to them including online activities in various states and other countries. Also, we are analyzing how to quantify unauthorized accesses in the online accounts of those taxing authorities.

9
9.

Determine why taxpayers often do not respond to various types of IRS notices and letters and how to improve the response rate.

Status: Open
Completion Date: TBD

Quarterly Update:
2nd
Quarter: Taxpayer Advocate Service (TAS) plans to hold focus groups with tax preparers at the IRS tax forums later this summer. Through our collaborations with IRS, we developed a guide to discuss what taxpayers do when they receive IRS notices and how IRS might improve its notices so taxpayers respond accurately.  We intend to use these focus group results to design future focus groups and surveys to be conducted directly with taxpayers.

1st Quarter: The Taxpayer Advocate Service (TAS) is planning to begin working on this objective during the second quarter of Fiscal Year (FY) 2022.

10
10.

Analyze tax return data, administrative Earned Income Tax Credit (EITC) audit files, and census data to recommend a credit structure that is easier to administer while generating similar benefits to low-income families.

Status: Open
Completion Date: TBD

Quarterly Update:
2nd Quarter:
​The Taxpayer Advocate Service (TAS) completed a literature search to catalog options for creating a new formula for determining the amount of Earned Income Tax Credit (EITC), splitting the total credit between an earning based credit and a per child credit. Also, we developed a file with all EITC received in Tax Year (TY) 2019 (a pre-pandemic tax year) and the procedures to compare the amount of EITC received with the amount of the credit. 

1st Quarter: Work surrounding this objective is planned to begin in the second quarter of Fiscal Year (FY) 2022.

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