Should the IRS Take to the Phones?

When the Taxpayer Advocate Service (TAS) submitted its 2011 annual report to Congress, it emphasized how “the IRS has changed from focusing on personal, local service to automated, centralized processes” and how this shift has hurt the taxpaying public. At least one author has taken this to mean that the IRS might be more effective in its collection efforts if it would pick up the phone and call taxpayers, particularly in the early stages of collections. See “Personal Finance: IRS Calls to Delinquent Taxpayers?” by Susan Tompor.

First, I’m not sure this was what the TAS had in mind.

Second, I’m not sure this is what we would want.

1. The problem with automated processes is that mistakes are common. Taxpayers are people and real people have real, sometimes unique tax problems that computers and automated letters/processes don’t always recognize. This results in delays and issues with fairness, which in turn results in distrust of the IRS. This is the concern that Nina Olson and the TAS has been harping on for years. While TAS is certainly pushing for an IRS with a more human element, I don’t think TAS is recommending they call everyone as soon as they incur a new tax debt.

2.  As Ms. Tompor correctly points out, with identity theft so rampant these days, few people would be comfortable speaking with a caller who purports to be from the IRS and who wants them to provide information such as their social security number, for verification purposes. I think this would be a waste of IRS resources. And while a phone call can be cheaper than the cost of postage, the phone calls would not replace the letters. Knowing the IRS, a confirming letter would have to be mailed after each call confirming the contact and the content of the conversation.

I am definitely in Nina Olson’s corner when it comes to making IRS interaction more helpful and individualized. But there is a time and place for everything, and I don’t think phone calls on standard collection cases are necessary or desirable.

The Taxpayer Advocate Has Spoken – Is Anybody Listening?

Today the Taxpayer Advocate Service (TAS) released its annual report to Congress and, once again, the tone of the report is one of alarm.

Nina Olson, head of TAS, is particularly concerned about the lack of funding at the IRS. Fewer employees are being asked to do more and more work, and services that should be handled by live bodies are often done by IRS automated systems. The result is that individuals can’t get their tax problems resolved. It’s a tax administration that may be on the brink of failure.

“We’ve had a number of years where the trending of taxpayer service funding has gone down and down in contrast to the increase of enforcement funding.  And then when you layer on the budget constraints, what you see is that taxpayer service is going to decline even more . . . I’m trying to give a warning to everybody, if we continue down this road, bad things are going to happen to taxpayers and it will be very difficult to reverse.

~ Nina Olson, National Taxpayer Advocate

The relationship between the TAS and the IRS is a strange one. The IRS posts the annual report on its website consistently every year and notifies interested parties by way of the IRS Newswire. But it seems obvious from the official IRS statements that the IRS is not happy with the strong comments from the TAS.

“While today’s report includes a number of helpful suggestions, the link described in the report between a challenging budget environment and alleged erosions in taxpayer rights is inaccurate and without basis in fact.

~ Michelle Eldridge, IRS spokesperson

The adversarial/independent nature of the IRS and the TAS perhaps should not be questioned these days. These certainly do not sound like unified voices.

Nina Olson: "Capable and Dogged"

I feel like my opinion of the Taxpayer Advocate Service is . . . evolving. Not that I ever had anything against Nina Olson personally, I have just always questioned the independence and effectiveness of the organization that sometimes seems like little more than a mini IRS within the IRS. If TIGTA is IRS’ big brother, then TAS is their only child — a chip off the ol’ block. However, the more I see Olson stating an opposing view (opposing the IRS), the more I grow to trust her and recognize the value of TAS in assisting with real tax relief.

In an interview with Bernie Becker of The Hill Nina Olson recently made the following statements describing the natural tension between her agency and the IRS:

You have to get used to the idea that you’re going to walk into a room, no one is going to want to see you there, they are not going to want you to open your mouth. And when you do open your mouth, they’re all going to will you to shut it as soon as possible. Because what you are going to be saying is, basically, pointing out that they didn’t think of something.

Speaking about the IRS’ failure to recognize when their policies are overly burdensome on the average taxpayer, she added:

When they get their mind on something, they just get hell-bent on something — and you could be talking to a tree and it might be more conversational.

I love that quote!  Very spunky. Rep. Pete Stark (D-Calif.), someone who knows her better than I do, said she is “capable and dogged” and the driving force behind the IRS’ actions. Read full storyhere.

So am I going to stop taking jabs when I see an opportunity? Probably not. Besides, I still think TAS has a long way to go as far as the ideals and advocacy of Olson herself trickling down to the rank and file.

TAS No Longer Taking Simple “Delay” Cases

The Taxpayer Advocate Service (TAS) — that independent organization within the IRS whose mission it is to assist taxpayers — announced that it no longer has the manpower to assist taxpayers where the only complaint is IRS delay. Taxpayers must go elsewhere for real tax relief.

TAS groups its cases into two broad categories: (1) Economic Burden and (2) Systemic Burden. They will continue to handle all Economic Burden cases, but the following “systemic burden” issues will be remanded to the IRS:

  1. Processing of Original Returns
  2. Unpostable/Rejected Returns
  3. Processing of Amended Returns
  4. Injured Spouse Claims
According to the TAS, delays associated with these 4 issues are typically due to the IRS being overloaded with work. And the way they see it, it makes no sense to push the problem off on them, who are also overloaded with work. So, the TAS will temporarily not be helping taxpayers with these specific issues. Of course, a systemic issue could be causing (or about to cause) an economic burden, and in that case, the TAS will hear it. Full details here.

IRS Wants Quantity More Than Quality

The Taxpayer Advocate Service (TPS) reports that IRS employee performance measures focus too much on “cycle time.” In other words, the IRS performance rules encourage employees to take actions and close cases quickly, even at the expense of quality work. This results in IRS employees setting unrealistic deadlines for taxpayers who face audits or IRS collection activity.

Unrealistic deadlines. This is certainly a problem that any practitioner could confirm, but for me it doesn’t hold the #1 position on my list of IRS problems. If the IRS is setting unrealistic deadlines, then at least they’re being responsive. The situation where the IRS employee responds too slowly can be just as frustrating as one where the employee is acting too quickly. However, even worse than that is the lack of discretion given to IRS employees. Most of them do not have authority to deviate from their rules, even in situations where it makes no sense to follow them. Of course, I understand that additional discretion can only be given to employees who, by their exceptional training, education, and experience, are responsible enough to not abuse that discretion. I guess the quality vs. quantity problem really begins at the employment interview.

TAS Takes Credit for Changes to Innocent Spouse Rule

The National Taxpayer Advocate, Nina Olson, took a bow yesterday as the IRS announced removal of the two-year statute of limitations under the Innocent Spouse program. According to Olson, she and her staff have been advocating for this change for some time now because an “innocent spouse” is often unaware of the shenanigans of his/her spouse until after the two-year period has passed from the IRS’ first collection activity, and it is really not fair to hold them to a limitations period. To read Ms. Olson’s complete statement, click here.

Taxpayer Advocate Interview

Nina Olson, head of the Taxpayer Advocate Service (TAS) recently spoke with Kiplinger. Check out the details here. She doesn’t really say anything we haven’t heard her say before, but we do learn that her Washington D.C. office is adorned with toy bulldogs to help remind her staff that they are charged with the task of protecting the little guy from the ruthlessness of the IRS.

Taxpayer Advocate Wants More Money Spent on Collections

Shouldn’t the Taxpayer Advocate be focused on providing high quality tax relief within the bounds of the law?

The Taxpayer Advocate Service (TAS) describes themselves as an “independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. ”

Today the TAS submitted its biannual report to Congress which evaluates IRS’s progress in 2010 and spells out its objectives for 2012. Here are some key points:

  • IRS resources are being strained due to new programs and less funding. New programs have resulted in higher call/inquiry volumes and there is less money available to pay for employees to field these calls and question.
  • TAS praises the IRS for making improvements to lien filing procedures, but does not believe it is doing enough. TAS suggests that the IRS cease filing liens based on amount owed, and instead look at the individual ability to pay. If the taxpayer is suffering from an economic hardship, no lien should be filed.
  • Dwindling resources resulted in more “bright-line” tests used by IRS employees; in other words, less discretion and less consideration of taxpayers’ individual circumstances.

The TAS also cited an interesting statistic: In 2010 the government spent $12.1 billion to run the Collections Department of the IRS, and that department collected $2.35 trillion in revenue (that’s $194 for each dollar spent). The TAS cited this statistic to show just how successful the IRS is in collecting taxes and to make their case for increased funding for these collection efforts. In fact, the TAS wants the IRS to be exempt from budget caps or reductions.

In my opinion, the TAS’s push for more funding seems inconsistent with their stated goal of looking out for the best interests of the taxpayer. What kind of advocate would be so interested in beefing up Collections?