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FY23 Goal 2: Protect Taxpayer Rights and Reduce Burden

Organizational Objectives

1
1.

Continue to analyze tax return data, administrative 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: Closed
Completion Date: 12/31/20232

Quarterly Update:
1st Quarter
: ​The Taxpayer Advocate Service (TAS) continued to analyze tax return data in Fiscal Year (FY) 2023. On December 31, 2022, the National Taxpayer Advocate (NTA) published a study report, entitled, “Exploring Earned Income Tax Credit Structures:  Dividing the Credit Between a Worker and Child Component and Other Considerations,” which addressed this objective. As indicated in the study report, this objective was modified slightly. This objective is closed.

2
2.

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

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter
: The Taxpayer Advocate Service (TAS) continued to analyze why taxpayers often do not respond to various types of IRS notices and letters in the first quarter of Fiscal Year (FY) 2023. Actions we took included reviewing internal processes to identify ways to improve efficiency when processing taxpayer responses, identifying ways to clarify communication so taxpayers understand what actions they should take, and conducting focus groups and surveys with taxpayers who have not responded to specific types of IRS correspondence to determine and quantify the reasons for non-response.

2nd Quarter: During this quarter, TAS continued analyzing why taxpayers often do not respond to various types of IRS notices. Further, TAS prepared the screener and moderator guides for taxpayer interviews, as well as to prepare the necessary documentation for Office of Management and Budget approval documents to conduct the taxpayer interviews. Also, TAS worked to quantify the number of notices mailed out to determine the reasons for non-response.

3
3.

Continue to advocate for improved collection policies and procedures through discussions with IRS Collection policy leaders and in reviewing Internal Revenue Manual (IRM) provisions and correspondence to taxpayers.

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter
: The Taxpayer Advocate Service (TAS) continued to advocate for improved collection policies and procedures through discussions with IRS Collection policy leaders and in reviewing Internal Revenue Manual (IRM) provisions and correspondence to taxpayers. During the first quarter, we proposed specific revisions to the IRM procedures to require the IRS to wait for 120 days (up from the current 105 days) after issuing a notice of deficiency before assessing additional tax to prevent premature assessments; however, the IRS responded in the ARC 2021 Report Card that it would not be feasible. Also, we worked on proposing specific revisions to IRM procedures to require the IRS to defer collection activity until 45 days after the IRS addresses the merits of a taxpayer’s correspondence and revisions to Notice CP 15, Civil Penalty Notice, when issued for assessable penalties. Additionally during the quarter, we worked on revisions to IRM procedures to allow the IRS to consider changes in taxpayers’ circumstances when determining the installment agreement user fee. The National Taxpayer Advocate plans to address Offset Bypass Refunds (OBRs) issues in her 2022 Annual Report to Congress in the Most Serious Problems (MSP) section.

2nd Quarter: ​TAS continued to advocate for improved collection policies and procedures in the second quarter by working with IRS’ Small Business/Self Employed (SB/SE) function to stand up a cross-business operating division (BOD) team where TAS will help develop both short-term and long-term solutions to improve taxpayer services to mitigate premature assessments and potential tax court delays with processing petitions.  Also during the second quarter, we proposed revisions to the Internal Revenue Manual (IRM) section 21.5.2.4.8.2 because the current programming only allowed for a maximum of 15 cycles if there is an open control. The changes we proposed, and IRS made to the IRM in March, incorporated the recommendation to allow the number of cycles needed for information to post when a taxpayer requests a hold on collection while their request is being worked.  Further, TAS met with IRS regarding two notices, the Civil Penalty Notice and the Civil Penalty Assessment, to discuss adding additional language to advise taxpayers they will not be provided additional opportunities to dispute the liability.  TAS is analyzing the notices and will make recommended changes in the third quarter.  Lastly, we continued to advocate for collection policies and procedures impacting taxpayers focused on Installment Agreements (IAs).  The Bipartisan Budget Act allows for waiver or reimbursement of the IA user fee in cases of any taxpayer with adjusted gross income, as determined for the most recent year where the information is available, which does not exceed 250 percent of the applicable  poverty level.  Though the law specifies who can qualify for waiver, there are no restrictions on how the funds are collected.  TAS continues to meet with the IRS to pursue a change of how the IA fee are collected.

4
4.

Continue to work with the IRS to end systemic assessment of International Information Returns (IIR) penalties and replace that system with a more efficient and equitable program.

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter
: The Taxpayer Advocate Service (TAS) continued our work with IRS to end the systemic assessment of International Information Return (IIR) penalties during the first quarter of Fiscal Year (FY) 2023. We have contacted the office of Servicewide Penalties to identify a point of contact for a cross-functional partnership, and we plan to acquire data on IIR penalties that were abated and sustained. However, due to the Broad Penalty Relief of 2022, many IIR penalties for tax years 2020 and 2021 were administratively waived or abated without the need to demonstrate reasonable cause.

2nd Quarter: ​TAS met with IRS’ Office of Servicewide Penalties in February to discuss aspects of the International Information Return (IIR) Penalties program and we will continue to monitor the effect of the US Tax Court decision of Farhy v. Commissioner, which said IRS does not have administrative authority to assess sections 6038 and 6038A penalties. Also, we are acquiring data related to IIR penalties which were abated and sustained to identify any opportunities to advocate on behalf of taxpayers impacted by said penalties.

5
5.

Assess the effectiveness of the IRS’s plans to reduce its backlog of amended returns.

Status: Closed
Completion Date: 12/31/2022

Quarterly Update:
1st Quarter
: The Taxpayer Advocate Service (TAS) completed this objective during the first quarter of Fiscal Year (FY) 2023. The National Taxpayer Advocate (NTA) plans to issue two Most Serious Problems (MSPs) in her Annual Report to Congress in January 2023 including MSP #1, Processing Delays- Paper Backlogs Caused Refund Delays for Millions of Taxpayers and MSP #6, E-Filing Barriers and the Absence of a Free, Easy-to-Use Tax Software Option Cause Millions of Taxpayers to Continue to File Paper Tax Returns regarding the effectiveness of IRS to reduce its backlog of amended returns. Further, IRS responded to Taxpayer Advocate Directive (TAD), 2021-2, and the NTA is addressing their response in her MSP #1, Processing Delays- Paper Backlogs Caused Refund Delays for Millions of Taxpayers. This objective is closed.

6
6.

Advocate for mitigation of the unintended impact of the filing season postponements on taxpayers who took advantage of the postponed filing season and whose advance payments (including withholding and quarterly payments) no longer align with the due date for 2019 and 2020 tax returns, resulting in the payments falling outside the three-year lookback period.

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter: 
The Taxpayer Advocate Service (TAS) advocated for mitigation of the unintended impact of the filing season postponements on taxpayers who took advantage of the postponed filing season and whose advance payments (including withholding and quarterly payments) no longer align with the due date for 2019 and 2020 tax returns. TAS met with IRS to discuss the need for published guidance related to this issue and their Chief Counsel has adopted this recommendation and included this on its priority guidance plan. A draft notice has been circulated for review through the review process. We are waiting for the notice to be finalized in the second quarter.

2nd Quarter: ​TAS advocated for the guidance that was published in Notice 2023-21, which makes more taxpayers eligible for a credit or refund if they timely file Form 1040-X to amend 2019 and 2020 income tax returns. Also, on February 27, 2023, the National Taxpayer Advocate (NTA) published a blog announcing the release of the Notice and addressed the mismatch between the time for filing a claim for credit or refund and the three-year lookback period caused by postponing certain filing deadlines for filing seasons 2020 and 2021. The notice only addressed the issue for postponements of the filing deadlines for TY 2019 and 2020.  TAS is continuing to collaborate with the IRS to provide relief to taxpayers anytime the IRS postpones the filing deadline for those affected by a federally declared disaster.

7
7.

Identify e-filing barriers and work with the IRS to improve the accuracy and efficiency of paper return processing.

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter
: The Taxpayer Advocate Service (TAS) identify e-filing barriers and worked with the IRS to improve the accuracy and efficiency of paper return processing during the first quarter of Fiscal Year (FY) 2023. TAS leadership met with the IRS to discuss the need for IRS Modernized e-File (MeF) to support commonly used forms for both individual and business taxpayers, met with representatives of the tax return preparation software industry to identify and evaluate the e-file barriers their customers experience and to determine how the IRS can minimize such barriers, met with the IRS and representatives of the tax return preparation software industry to discuss the overall need to reject an e-filed “imperfect tax return” and evaluate the feasibility of accepting the imperfect tax return upon e-filing and directing it to a treatment stream for further review, and met with representatives of the tax return preparation software industry to determine how to minimize any barriers to incorporate scanning technology into the processing of electronically prepared returns that are printed out and filed on paper. This resulted in the planned issuance of Most Serious Problem (MSP) #6, E-File and Free File, in the National Taxpayer Advocate’s (NTA) Annual Report to Congress (ARC). Additional activities with IRS are expected to resume in the second quarter.

2nd Quarter: The National Taxpayer Advocate (NTA) will attend the Council for Electronic Revenue Communication Advancement (CERCA) conference in the 3rd quarter on May 11, 2023 as a featured speaker at the conference.  The industry will meet with the NTA and other IRS officials in breakout sessions.

8
8.

Work with the IRS to improve phone service and advocate for multiyear funding from Congress.

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter
: During the first quarter of Fiscal Year (FY) 2023, the Taxpayer Advocate Service (TAS) worked with the IRS to improve phone service and advocate for multiyear funding from Congress. The National Taxpayer Advocate (NTA) plans to included telephone and in-person service as a Most Serious Problem (MSP) in her 2022 Annual Report to Congress (ARC).  During the second quarter, TAS will continue to advocate for enhanced phone service.

2nd Quarter: ​The National Taxpayer Advocate (NTA) included Telephone and In-Person Service in her 2022 Annual Report to Congress (ARC) as one of the top ten Most Serious Problems (MSPs) facing taxpayers.  The Inflation Reduction Act 0f 2022 increased funding for Operations Support specifically dedicated for taxpayer service and Information Technology initiatives.   The IRS’s Accounts Management (AM) function hired 5,659 additional employees as of December 30, 2022, nearly meeting its FY 2023 hiring goal of 5,775. The approximate 5,000 employees added to the customer service phone lines has helped top 85 percent level of service during the first weeks of filing season.  The Taxpayer Advocate Service will continue to advocate for enhanced in-person and phone services.

9
9.

Continue to collaborate with the IRS to ensure continued improvement of the IRS’s telephone and in-person service.

Status: Closed
Completion Date: 12/31/2022

Quarterly Update:
1st Quarter
: The Taxpayer Advocate Service (TAS) continued to collaborate with the IRS to improve their IRS’s telephone and in-person service. During the first quarter, we completed all activities surrounding the IRS  University model. This objective is closed.

10
10.

Continue to identify case process efficiencies, including requesting expansion of our delegated authorities and partnering with Enterprise Case Management (ECM) to modernize processes.

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter
: The Taxpayer Advocate Service (TAS) continued identifying case process efficiencies during the first quarter of Fiscal Year (FY) 2023 by working with the owners of the Integrated Action Tool (IAT) program to continue development of the Collection Statue Expiration Date (CSED) calculator. Current work on the programming change has been placed on hold; however, TAS will continue advocating for this change. Also, we are conducting an analysis of the intake process to identify and address the impact of the pandemic on our work processes, including case receipts from the IRS including exploring new ways to address our Account Management System (AMS) inventory so taxpayer cases are loaded on to the Taxpayer Advocate Management Information System (TAMIS) quickly. We will continue our work on this objective in the second quarter.

2nd Quarter: ​IRS’ Integrated Automated Technologies (IAT) announced the Collection Statute Expiration Date (CSED) tool project is restarting and work will resume in the third quarter. The project is in the design and development stage and TAS committed an analyst to work with the IAT development team. Also, TAS completed an analysis of the case intake process and a recommendation from the analysis was for us to work with a Lean Six Sigma Team to complete an Opportunity Assessment on our case intake process. During this assessment, we will identify how and where employees can provide maximum value to taxpayers and to ensure our customers are receiving consistent efficient high-quality service.

11
11.

Continue to 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
Expected Completion Date: TBD

Quarterly Update:
1st Quarter
: The Taxpayer Advocate Service (TAS) formed a team of Subject Matter Experts (SMEs) to evaluate our case receipts involving the Individual Taxpayer Identification Number (ITIN) application and renewal processes.  We identified barriers in the process and created outreach materials to educate the undocumented immigrant community regarding the ITIN application process and how to overcome barriers.  The final outreach materials will be available in the second quarter.

2nd Quarter: A draft of the outreach materials is under peer review.

12
12.

Evaluate the TAS case intake process to determine if adding additional intake methods would reduce taxpayer burden.

Status: Closed
Expected Completion Date: 03/31/2023

Quarterly Update:
1st Quarter
: The Taxpayer Advocate Service (TAS) leadership met in December to consolidate recommendations into a deck for presentation to our senior leadership.

2nd Quarter: TAS completed its analysis of the intake process and delivered its initial recommendations to the TAS senior leadership.

This objective is complete.