Taxpayer Advocate Service Mid-Year Report to Congress

From the Desk of Lauran L. Stevenson

Taxpayer Advocate Service Mid-Year Report to Congress

This week’s post will introduce the Fiscal Year Objectives Report to Congress. This report presents a review of the 2017 Filing Season and identifies the priority issues (“Selected Areas of Focus”) the Taxpayer Advocate Service (TAS) will address during the upcoming fiscal year. In future posts, some of the more intriguing areas will be addressed in more detail.

Selected Areas of Focus:

1. The Design of the IRS’s Private Debt Collection (PDC) Will Disproportionately Burden Taxpayers in Economic Hardship and Impose Unnecessary Costs on the Public.
As of May 17, 2017, the IRS implemented its new private debt collection program. The IRS had assigned to private collection agencies the debts of approximately 9,600 taxpayers, approximately 5,900 of whom filed a recent return.

2. The IRS’s Certification Program Related to Denial or Revocation of Passports Impairs Taxpayer Rights.
In 2015, Congress passed a law requiring the Department of State to deny an individual’s passport application and allowing it to revoke or limit an individual’s passport if the IRS certifies the individual as having a seriously delinquent tax debt.

3. The Offshore Voluntary Disclosure (OVD) Programs Still Lack Transparency, Violating the Right to Be Informed.
The IRS establishes the terms of its Offshore Voluntary Disclosure Settlement Programs (OVDP) by posting frequently asked questions (FAQs) on its website.

4. The IRS Makes Needed Changes to the Individual Taxpayer Identification Number (ITIN) Program, But Barriers for ITIN Applications Remain.
The IRS has made commendable efforts to implement recent legislative provisions involving Individual Taxpayer Identification Numbers (ITINs) but falls short in making it possible for all taxpayers to timely comply with tax obligation.

5. The IRS Heavy Reliance on Online Accounts Benefits Taxpayers Who Can Access the Application and Prefer Digital Interaction, But It Burdens Taxpayers Who Need or Prefer More Personalized Service.
An online account application benefits taxpayers who have the ability, knowledge, and preference to navigate through complex transactions online. However, only about 30 percent of attempted account registrations satisfy crucial e-authentication requirements.

6. TAS Continues to Pursue Improvements to the IRS’s Administration of the Earned Income Credit, Particularly with Recent Changes to the Law.
To address the Earned Income Tax Credit (EITC) improper payment rate, Congress mandated a delay of any refund that includes the EITC. TAS and the IRS are also identifying ways to improve the audit process for EITC taxpayers, which has led to an expansion of acceptable documentation to substantiate EITC claims.