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FY24 Goal 2: Protect Taxpayer Rights and Reduce Burden

Organizational Objectives

1
1.

Work with the IRS to identify problems and suggest changes to Individual Taxpayer Identification Number processing that will reduce delays negatively impacting taxpayers

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter: During the first quarter, TAS worked with the IRS to identify problems and suggest changes to the Individual Taxpayer Identification Number (ITIN) process. TAS offered to collaborate with the ITIN unit to develop and implement procedures that allow all applicants to apply for an ITIN throughout the year by submitting proof of a filing requirement. Also, we offered to collaborate for the development of an online Form W-7. Unfortunately the IRS declined both offers. During the second quarter, we will continue to advocate for the development and implementation of procedures to avoid unnecessary delay during the peak filing season.

Also during the quarter, TAS investigated how many ITIN holders’ claimed tax benefits the IRS disallowed because it did not timely process their ITIN renewal application or tax return. Our analysis showed nearly 95,000 tax returns had been denied a tax credit due to an expired or missing ITIN. The most common adjustment for this population is the denial of the other dependent credit (ODC).

2nd Quarter: During the second quarter, TAS suggested the Individual Taxpayer Identification Number (ITIN) unit consider assigning ITINs based on current year earnings statements submitted prior to the start of the filing season. This change may reduce the burden on the taxpayer and IRS if the taxpayer is allowed to submit Form W-7, Application for Individual Taxpayer Identification Number, with earning statements. Also, it could balance the workload for the ITIN unit throughout the year and may avoid unnecessary delays.

During the third quarter, we plan to reach out to the ITIN policy manager and request invitations to their policy meetings and continue working with the IRS for updates on changing policy to allow an electronic signature on Form W-7.

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2.

Evaluate the IRS implementation of the Inflation Reduction Act Strategic Operating Plan to maximize protection of taxpayer rights

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter: During the first quarter, TAS participated on teams addressing the proposed initiatives in the Strategic Operating Plan. Initiative teams are in various stages of development ranging from early planning and coordination efforts to pilot program development. TAS has laid groundwork for these efforts and has led two Human Capital Transformation teams which examined private and public sectors to see how learning solutions were being implemented and used to train and support their respective workforces, then worked with the IRS to determine the viability of the learning solutions for the Service. TAS is participating in planning the first-ever text messaging pilots for taxpayers, tax professionals and other stakeholders and is working across the IRS to evaluate cases where text messaging may enhance existing communication efforts. Finally, TAS has communicated this quarter’s announcement of a Direct File pilot program for taxpayers living in eligible states.

2nd Quarter: During the second quarter, TAS identified best practices and key challenges associated with implementing the standalone Walk in Your Shoes and Creating Connections in a Hybrid Workforce Programs. Also, TAS led an internal assessment of available technological tools presently being utilized by the IRS that potentially could be leveraged to automate each of these programs and completed Veteran’s Administration scammers outreach. Further, TAS provided resources to stand up the Customer Support Team within the Direct File initiative including finding innovative ways to create secure messaging live chat and virtual assistant.

During the third quarter, we plan to develop a Servicewide Scams and Schemes Strategy and continue to lead two Human Capital Transformation teams to identify best practices, benefits, risks, recommendations and next steps for immersive learning, coaching and mentoring. Further, TAS will continue to partner with the Human Capital Office to achieve the FY 2024 milestones, including launching the IRS University and implementing the Leadership Competency Framework across the IRS.

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3.

Evaluate how the IRS is protecting the taxpayer’s right to confidentiality, and preventing unlawful uses and disclosures of their tax return information and advocate to ensure waivers follow IRS rules and regulations; are clear, concise, and written in plain language; and provide taxpayers an avenue by which they can hold parties accountable if their return information is disclosed to a third party without their consent

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter: TAS anticipates beginning work on this objective in February 2024.

2nd Quarter: During the second quarter, TAS conducted research regarding the possibility of eliminating arbitration clauses and waivers contained in the agreements signed during the use of eFile software. Also, we participated in the testing of eFiling software to ensure taxpayer information is protected and to determine what consent taxpayers sign when usng these software programs.

During the third quarter, additional legislative recommendation related to eliminating arbitration clauses will be explored.

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4.

Continue to propose legislative and administrative changes to reduce taxpayer compliance burdens by making the process of preparing and filing tax returns less complicated

Status: Closed
Completion Date: 3/31/2024

Quarterly Update:
1st Quarter: During the first quarter, TAS continued proposing legislative and administrative changes to reduce taxpayer compliance burdens by making the process of preparing and filing tax returns less complicated. We developed a Most Serious Problem (MSP #7- Online Account Access for Taxpayers and Tax Professionals) for inclusion in the Fiscal Year 2023 Annual Report to Congress and recommended the IRS improve the customer experience by increasing online accounts functionality with the ability to “view and import Forms W-2 and 1099 into their tax return software.” Also, TAS completed the 2024 Purple Book, which presents a concise summary of 66 legislative recommendations the National Taxpayer Advocate believes will strengthen taxpayer rights and improve tax administration, including through simplification of the Internal Revenue Code. Further, the National Taxpayer Advocate proposed four legislative recommendations to increase taxpayer compliance and reduce burden.

Lastly, TAS monitored the guidance and information provided by the IRS of the Forms 1099-K information. TAS recommended an Internal Revenue Manual update and change to the Form 1040, Schedule D instructions to include information on how to report a personal loss reported on a form 1099-K. This will aid examiners when verifying Form 1099-K income and help avoid unnecessary taxpayer burden. The IRS accepted both recommendations and implemented the changes.

2nd Quarter: During the second quarter, TAS provided in-depth training to coincide with the 2024 Congressional Affairs Program Conference in February 2024.

Also, TAS completed monitoring the information the IRS provides to the public regarding Form 1099-K, including updates that the IRS made to its FAQs and IRS.gov pages in March 2024. TAS addressed the IRS’s guidance on Form 1099-K in a presentation to the American Bar Association and in three blogs covering Form 1099-K issues. The blogs published were “Tips for Avoiding Incorrect Forms 1099-K”, “If You Resold the Hottest Ticket of Summer 2023, You Likely Didn’t Receive a Form 1099-K – But This Won’t Last Forever & Always”, and “An Introduction to Tax Forms for Gig Economy Workers.”

All actions are complete and this objective is closed.

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5.

Collaborate with IRS stakeholders to implement systemic First-Time Abatement in conjunction with recharacterized reasonable cause relief

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter: TAS will meet with IRS in the second quarter to discuss and formulate a plan to implement systemic First-Time Abatement in conjunction with recharacterized reasonable cause relief. Also, TAS met with the Office of Servicewide Penalties during the first quarter and will continue to advocate for reasonable cause relief.

2nd Quarter: During the second quarter, TAS continued to advocate with IRS for systemic implementation of first-time administrative abatement of penalties. Also, we met with the Office of Servicewide Penalties (OSP) in March 2024 and will continue to advocate for reasonable cause relief.

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6.

Advocate to end systemic assessment of international information return penalties and to develop a First-Time Abatement waiver specific to these penalties

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter: During the first quarter, TAS advocated to end systemic assessment of international information return penalties and to develop a First-Time Abatement (FTA) waiver specific to these penalties. We met with the Office of Servicewide Penalties and continues to advocate for FTA waiver for International Information Return penalties. Also, we included “International” as one of the top 10 Most Serious Problems facing taxpayers. Further, we recommended IRS stop automatic assessment and collection of Chapter 61 International Information Return penalties prior to considering the taxpayer’s specific facts and circumstances. Also during the first quarter, we continued monitoring the effect of the United States Tax Court decision of Farhy v. Commissioner, 160 T.C. Number 6.

2nd Quarter: During the second quarter, TAS continued monitoring the effect of the U.S. Tax Court decision of Farhy v. Commissioner as IRS filed notice of its intention to appeal the Tax Court’s ruling. Counsel advised IRS to continue as normal with assessing the Form 5471 penalties, Information Return of U.S. Persons With Respect to Certain Foreign Corporations. Also, we continued to advocate with the Office of Servicewide Penalties (OSP) for the First-Time Abatement (FTA) waiver for International Information Return (IIR) penalties and noted the National Taxpayer Advocate included in the 2023 Annual Report to Congress, recommendations that the IRS stop automatic assessment and collection of Chapter 61 IIR penalties prior to considering the taxpayer’s specific facts and circumstances, including providing the taxpayer their appeal rights. Lastly, TAS met with the OSP in March 2024 to advocate for a civil penalty-free version of the Delinquent International Information Return Submission Procedures.

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7.

Collaborate with the IRS to identify and implement strategies for increasing e-file rates for individual and business taxpayers

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter: During the first quarter, TAS identified the Free-File program owner and arranged an introductory meeting to get behind the numbers and brainstorm potential options for increased taxpayer use.  TAS learned the Free-File upper limit for Adjusted Gross Income is actually revised annually to ensure 70 percent of the individual taxpayers can qualify for the service.  However, the actual number of Free File returns through December 15, 2023, was down 11 percent.  The number of Free File returns (2,852 million) processed in Fiscal Year 2023 is only 1.7 percent of the overall Individual Master File figure for returns filed (161,869 million)—far below the 70 percent of taxpayers who could use the free option.  The program’s Research function reviews data to see where people migrate each year when choosing a filing option (E-file, Free File, Direct File, paper, etc.)  TAS will begin communications with the Direct File program owners in the second quarter.

2nd Quarter: During the second quarter, TAS created a project to monitor IRS actions to combat bad actor’s Artificial Intelligence techniques directed against IRS authentication. Additionally, we reviewed congressional concerns surrounding legal use of Artificial Intelligence to detect tax fraud that actively monitors millions of Americans’ private transactions, bank accounts, and related financial information without any legal process.

Also, TAS collaborated with an IRS Online Services team to develop recommendations for “Authenticated Chat” whose objective is to ensure a standard process that can also encompass existing non-authenticated chatbots or voicebots. We plan to recommend all approved recommendations serve as another option for taxpayers, along with eFile and the Direct File Pilot. Further, we assisted in spreading the word and encouraging the use of the electronic filing option through a National Taxpayer Advocate blog titled, “Multiple Free Filing Options Available for Taxpayers in 2024.” Lastly, we provided recommendations to enhance the IRS’s primary website regarding the following initiatives: Direct File, Free-File, Free tax preparation, and face-to-face help offerings on Saturdays at Taxpayer Assistance Center offices.

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8.

Advocate for improvements and increased independence within the Independent Office of Appeals

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter: TAS held the TAS/Appeals Advisory Board meeting with Appeals on August 1, 2023. TAS offered to review the Appeals Internal Revenue Manuals (IRMs) and training materials to make recommendations for improving Appeals’ independence. The Operating Division was appreciative of the offer. During the first quarter of Fiscal Year 2024, TAS continuee to look for ways to improve Appeals’ independence.

2nd Quarter: During the second quarter, TAS attended the TAS-Appeals Advisory Board meeting. We advocated for Alternative Dispute Resolution (ADR) denials to provide specific explanation of decisions in writing and discussed the benefits of providing written ADR denials which would be similar to sharing the Appeals Case Memorandums with taxpayers to which Appeals agreed. Also, during the meeting, Appeals agreed that publicly sharing Alternative Dispute Resolution (ADR) data results, successful resolutions, and cycle-time on the IRS.gov website is something they would support and will consider implementing as a pilot recommendation. Appeals also mentioned they track cycle-time workstream and this can also be considered for publication. Separately, TAS discussed our access to the Electronic Case Receipt (ECR) system and Appeals Centralized Database System (ACDS) and noted access would enhance service to TAS taxpayers and reduce unnecessary delays.

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9.

Identify compliance barriers for overseas taxpayers and make administrative recommendations to minimize the burdens imposed on this population

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter: During the first quarter, TAS identified compliance barriers for overseas taxpayers and made administrative recommendations to minimize the burdens imposed on this population. The National Taxpayer Advocate (NTA) included in the 2023 Annual Report to Congress “Compliance Challenges for Taxpayers Abroad” as one of the top 10 Most Serious Problems facing taxpayers. Further, the NTA recommended the IRS translate the most common international tax forms and instructions, starting with Publication 54, into multiple languages other than English and provide greater accessibility to online accounts for taxpayers abroad who cannot authenticate through the current credential service provider. Also, during the composition the 2023 Annual Report to Congress, we met with representatives and stakeholders for international taxpayers to better understand the challenges they faced in complying with their U.S. tax obligations and will continue to meet with them throughout Fiscal Year 2024.

2nd Quarter: During the second quarter, the National Taxpayer Advocate included in her 2023 Annual Report to Congress “Compliance Challenges for Taxpayers Abroad” as one of the top 10 Most Serious Problems (MSP) facing taxpayers. It noted that TAS reviewed procedures and correspondence products for Automated Under Reporter (AUR) and correspondence exam identifying circumstances where international taxpayers need additional time to respond. We also recommended that IRS allow taxpayers located outside the United States an additional 60 days to respond to all IRS correspondence that requires a response or other action from the taxpayer. Separately, TAS met with representatives and stakeholders of international taxpayers to better understand the challenges they faced in complying with their U.S. tax obligations.

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10.

Determine how often the IRS is meeting its procedural guidance for implementing bans preventing a taxpayer from claiming Earned Income Tax Credit, Additional Child Tax Credit, or American Opportunity Tax Credit for two years and report the results to the National Taxpayer Advocate

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter: During the first quarter, TAS and the National Taxpayer Advocate developed a study report, entitled, “Study of the Two-Year Bans on the Earned Income Tax Credit, Additional Child Tax Credit, and American Opportunity Tax Credit”, which addressed this objective.

2nd Quarter: On January 31, 2024, the National Taxpayer Advocate published a study report, entitled, “Study of the Two-Year Bans on the Earned Income Tax Credit, Additional Child Tax Credit, and American Opportunity Tax Credit”, which addressed this objective.

We continue to report findings through testimonies and blogs regularly.

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11.

Explore past IRS collection data and outcomes to recommend guidelines to the IRS for determining under what circumstances it should generally not initiate enforcement actions such as issuing a levy or filing a lien

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter: During the first quarter, TAS actively worked on these activities by continuing to compile data and develop new analyses and drafting a report.

2nd Quarter: During the second quarter, the analysis and report were completed and is currently under review by National Taxpayer Advocate prior to its release.

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12.

Collect data and 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: During the first quarter, TAS actively worked on these activities by monitoring interviews conducted by our contractors.

2nd Quarter: During the second quarter, TAS actively worked with vendors to complete focus group questionnaires on the non-response of audit notices.

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13.

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

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter: During the first quarter, TAS continued to work with Appeals to review the Notice Computer Paragraph (CP) 15, Civil Penalty Notice, and Notice CP215, Civil Penalty Assessment. Appeals committed to assisting with this issue by assigning an employee to review the paragraph information for each notice to determine which paragraphs or penalties in the Internal Revenue Code are considered a prior opportunity. The owners of the CP15 and CP215 are also considering additional language that can be added when it is their only opportunity to dispute the liability.

Further, the National Taxpayer Advocate continued to advocate for the IRS to allow taxpayers whose Installment Agreement (IA) payment is less than the user fee to pay the user fee over the life of the IA rather than with the initial payment. This issue impacts nearly 15 percent of all installment agreements and talks will continue at the executive level in the second quarter.

2nd Quarter: During the second quarter, TAS worked with Appeals and IRS Operational Support to review the Notice Computer Paragraph (CP) 15, Civil Penalty Notice and Notice CP215, Civil Penalty Assessment, to determine which paragraphs or penalties in the Internal Revenue Code are considered a prior opportunity.  Once determined, the owners of the two notices committed to adding language to inform taxpayers when it is their only opportunity to dispute the liability.

Also, the National Taxpayer Advocate advocated for the IRS to allow taxpayers whose Installment Agreement payment is less than the user fee to be treated equitably by allowing the fee to be taken from their agreed upon payments rather than required with the initial payment.

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14.

Continue advocating 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: Closed
Completion Date: 10/01/2023

Quarterly Update:
1st Quarter: All actions in this objective were complete during Fiscal Year (FY) 2023 and the first quarter of FY 2024. This objective is closed.

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15.

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

Status: Closed
Completion Date: 10/01/2023

Quarterly Update:
1st Quarter: All actions in this objective were complete during Fiscal Year (FY) 2023 and the first quarter of FY 2024. This objective is closed.

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16.

Continue identifying case process efficiencies, including requesting expansion of our delegated authorities and partnering with Enterprise Case Management to modernize processes

Status: Open
Expected Completion Date: TBD

Quarterly Update:
1st Quarter: TAS continued identifying case process efficiencies and requesting expansion of our delegated authorities. Also, we are partnering with Enterprise Case Management to modernize processes by implementing two “challenge weeks” with Account Management System (AMS) where intakes are solely dedicated to AMS intake to help ensure inquiries are processed timely. During the first quarter, we started a Lean Six Sigma process to identify process improvements to reduce the number of days between case receipt and case assignment to a Case Advocate. This allows us to explore new ways to address our AMS inventory and make certain taxpayer cases are loaded on to the Taxpayer Advocate Management Information System (TAMIS) quickly.

Further, our Technical Analysis and Guidance function worked with IRS to discuss possible expansion of delegations of authority and determined the lack of integration between the various systems used by these functions was a significant barrier to the proposed expansion of TAS delegated authorities. Lastly, our Business Assessment function received executive approval and stood up a new program for risk management, made certain TAS executives understood the new process, and worked on developing training for additional levels of TAS leadership. We will continue developing our risk program during the second quarter.

2nd Quarter: During the second quarter, TAS continued identifying case process efficiencies including testing a new Integrated Automation Technologies Collection Statute Expiration Date calculator tool, holding weekly meeetings for Account Management Systems (AMS) focused work, working with IRS’s Chief Counsel on the draft of this Servicewide Delegation Order, and developing and delivering two targeted training guides, Taxpayer Advocate Service Risk Management and Risk Acceptance Form and Tool (RAFT) Guidance and Understanding a Risk Register, to the TAS Change Management Team Leads and TAS Leaders.