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Taxpayer Advocate Service

Taxpayer Advocate Service

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Taxpayer Advocate Service

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    1. Taxpayer Advocate Service .

    2. 2 Who We Are An independent Organization Within the IRS Created by Restructuring and Reform Act of 1998 (RRA 98) Although TAS is a part of the IRS, we are an independent organization. The Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 (RRA 98) amended Internal Revenue Code (IRC) sections 7803 and 7811. This Act created the position of the National Taxpayer Advocate (NTA) and strengthened the Taxpayer Advocate organization by making it independent within the IRS. IRC 7803(c) identifies the following functions for the Office of the Taxpayer Advocate: -- Assist taxpayers in resolving problems with the Internal Revenue Service; -- Identify areas in which taxpayers have problems in dealings with the Internal Revenue Service; -- To the extent possible, propose changes in the administrative practices of the Internal Revenue Service to mitigate problems; and -- Identify potential legislative changes which may be appropriate to mitigate such problems. Although TAS is a part of the IRS, we are an independent organization. The Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 (RRA 98) amended Internal Revenue Code (IRC) sections 7803 and 7811. This Act created the position of the National Taxpayer Advocate (NTA) and strengthened the Taxpayer Advocate organization by making it independent within the IRS. IRC 7803(c) identifies the following functions for the Office of the Taxpayer Advocate: -- Assist taxpayers in resolving problems with the Internal Revenue Service; -- Identify areas in which taxpayers have problems in dealings with the Internal Revenue Service; -- To the extent possible, propose changes in the administrative practices of the Internal Revenue Service to mitigate problems; and -- Identify potential legislative changes which may be appropriate to mitigate such problems.

    3. 3 TAS Leadership Nina Olson National Taxpayer Advocate Melissa Snell Deputy National Taxpayer Advocate Cheryl Gramalia Executive Director, Systemic Advocacy Randy Swartz, Acting Executive Director, Case Advocacy We are fortunate to have a leader like Nina, who is very passionate about protecting taxpayer rights and advocating improvement of tax administration for all taxpayers. We are fortunate to have a leader like Nina, who is very passionate about protecting taxpayer rights and advocating improvement of tax administration for all taxpayers.

    4. 4 TAS Offices National Taxpayer Advocate Office - Washington, DC 73 Local TAS offices nationwide - One or more in every state - One for District of Columbia - One for Puerto Rico - One at each IRS Campus By law, we are required to have at least one Taxpayer Advocate in each state. However we currently have more than one advocate in the larger states such as California, Texas and New York. We also have an advocate in each IRS campus.By law, we are required to have at least one Taxpayer Advocate in each state. However we currently have more than one advocate in the larger states such as California, Texas and New York. We also have an advocate in each IRS campus.

    5. 5 What We Do We help taxpayer resolve problems with the IRS and recommend changes to prevent the problems TAS service is free and tailored to meet your needs Our mission: There are two sides to TAS. We have the case resolution side where we resolve individual problems and we have the Systemic Advocacy side where we identify problems, inequities, and taxpayer rights issues that impact a large number of taxpayers and recommend changes to these issues-we will discuss Systemic Advocacy in more detail later in the presentation. Our service is free. Your assigned case advocate will listen to your point of view, work with you to address your concerns, and see your case through to an appropriate conclusion. Our mission: There are two sides to TAS. We have the case resolution side where we resolve individual problems and we have the Systemic Advocacy side where we identify problems, inequities, and taxpayer rights issues that impact a large number of taxpayers and recommend changes to these issues-we will discuss Systemic Advocacy in more detail later in the presentation. Our service is free. Your assigned case advocate will listen to your point of view, work with you to address your concerns, and see your case through to an appropriate conclusion.

    6. 6 When We Get Involved Most Cases Can and Should Be Resolved Through Normal IRS Channels The Taxpayer Advocate Service Is Not a Second IRS

    7. 7 Some Normal IRS Channels Taxpayer Assistance Centers Toll-Free Telephone Service Practitioner Priority Service Here are some of the other avenues to explore first When these avenues do not work, consider contacting the Taxpayer Advocate Service. Taxpayer Assistance Centers Toll-free Telephone Number: 1-800-829-1040 (Individual) 1-800-829-4933 (Business) Practitioner Priority Service: 1-866-860-4259 Here are some of the other avenues to explore first When these avenues do not work, consider contacting the Taxpayer Advocate Service. Taxpayer Assistance Centers Toll-free Telephone Number: 1-800-829-1040 (Individual) 1-800-829-4933 (Business) Practitioner Priority Service: 1-866-860-4259

    8. 8 TAS Criteria Suffering Economic Harm Facing Adverse IRS Action Will Suffer Irreparable Injury Will Incur Significant Cost Taxpayers (individual and business) or their representatives contact TAS when facing these situations ***Distribute Publication 4571 Taxpayer Advocate Service (TAS) and Taxpayer Rights Flyer URL: http://publish.no.irs.gov/PUBS/PDF/49310K06.PDF These situations fall into what we call our economic burden cases, situations where taxpayers are facing an economic burden due to IRS actions. For example, taxpayers were expecting a refund, and they received a notice that their refund was frozen due to a compliance project. The taxpayers need their refund to pay their rent. In this situation they could contact TAS to assist in obtaining the refund. Approximately 23 percent of TAS inventory fall into this category and the remaining 77 percent fall into the category of what we call systemic burden. These cases involve some type of systemic issue- For example taxpayers submitted documentation as requested through a correspondence audit for a client. They then receive notice that the information was never received so they submit it several more times and still do not receive acknowledgment of receipt. This is a systemic failure and they should contact TAS for assistance. We will discuss later how analysis of the systemic burden cases ties into our Systemic Advocacy program and to the NTAs report to Congress, which we will also discuss. Taxpayers (individual and business) or their representatives contact TAS when facing these situations ***Distribute Publication 4571 Taxpayer Advocate Service (TAS) and Taxpayer Rights Flyer URL: http://publish.no.irs.gov/PUBS/PDF/49310K06.PDF These situations fall into what we call our economic burden cases, situations where taxpayers are facing an economic burden due to IRS actions. For example, taxpayers were expecting a refund, and they received a notice that their refund was frozen due to a compliance project. The taxpayers need their refund to pay their rent. In this situation they could contact TAS to assist in obtaining the refund. Approximately 23 percent of TAS inventory fall into this category and the remaining 77 percent fall into the category of what we call systemic burden. These cases involve some type of systemic issue- For example taxpayers submitted documentation as requested through a correspondence audit for a client. They then receive notice that the information was never received so they submit it several more times and still do not receive acknowledgment of receipt. This is a systemic failure and they should contact TAS for assistance. We will discuss later how analysis of the systemic burden cases ties into our Systemic Advocacy program and to the NTAs report to Congress, which we will also discuss.

    9. 9 TAS Criteria Significant Delay Past Normal IRS Processing Time No Response from IRS by Promised Date System or Procedure Failure These cases involve some type of systemic issue- For example taxpayers submitted documentation as requested through a correspondence audit for a client. They then receive notice that the information was never received so they submit it several more times and still do not receive acknowledgment of receipt. This is a systemic failure and they should contact TAS for assistance. We will discuss later how analysis of the systemic burden cases ties into our Systemic Advocacy program and to the NTAs report to Congress, which we will also discuss. These cases involve some type of systemic issue- For example taxpayers submitted documentation as requested through a correspondence audit for a client. They then receive notice that the information was never received so they submit it several more times and still do not receive acknowledgment of receipt. This is a systemic failure and they should contact TAS for assistance. We will discuss later how analysis of the systemic burden cases ties into our Systemic Advocacy program and to the NTAs report to Congress, which we will also discuss.

    10. 10 TAS Criteria Best Interest of the Taxpayer The manner in which the tax laws are being administered raise considerations of equity, or have impaired or will impair the taxpayers rights. Public Policy The NTA determines compelling public policy warrants special assistance to an individual or group of taxpayers. TAS criteria expanded in January 2006 to include these areas. TAS criteria expanded in January 2006 to include these areas.

    11. 11 TAS Authority Taxpayer Assistance Order (TAO) Taxpayer Advocate Directive (TAD) TAO is issued by the LTA or the NTA. This relates to a taxpayer account. The TAD can only be issued by the NTA, when taxpayers may be suffering harm and the situation impacts IRS programs. TAO is issued by the LTA or the NTA. This relates to a taxpayer account. The TAD can only be issued by the NTA, when taxpayers may be suffering harm and the situation impacts IRS programs.

    12. 12 Systemic Advocacy Part of TAS organization Works on issues affecting MULTIPLE taxpayers (individuals or businesses) Now that we have discussed how we deal with individual cases, we now want to discuss the second part of our mission, which is to recommend changes to prevent problems. The Office of Systemic Advocacy is part of the larger TAS organization which addresses broad issues that impact groups of taxpayers. These issues: - Affect MULTIPLE taxpayers; individuals or businesses -Relate to IRS systems, policies, and procedures -Require analysis, administrative solutions, or legislative changes. -Involve protecting taxpayer rights The TAS Office of Systemic Advocacy works within the IRS to resolve issues involving procedures and policies. Examples of our joint initiatives with other IRS units include refund issues, Federal Tax Deposit (FTD) penalties, and Individual Taxpayer Identification Numbers (ITINs). Now that we have discussed how we deal with individual cases, we now want to discuss the second part of our mission, which is to recommend changes to prevent problems. The Office of Systemic Advocacy is part of the larger TAS organization which addresses broad issues that impact groups of taxpayers. These issues: - Affect MULTIPLE taxpayers; individuals or businesses -Relate to IRS systems, policies, and procedures -Require analysis, administrative solutions, or legislative changes. -Involve protecting taxpayer rights The TAS Office of Systemic Advocacy works within the IRS to resolve issues involving procedures and policies. Examples of our joint initiatives with other IRS units include refund issues, Federal Tax Deposit (FTD) penalties, and Individual Taxpayer Identification Numbers (ITINs).

    13. 13 Bringing Systemic Issues to TAS Systemic Advocacy Management System (SAMS) Web-based system to receive advocacy issues, ideas, suggestions For taxpayers, practitioners, academic, research & professional organizations Available on Systemic Advocacy page on www.irs.gov/advocate Remember at the beginning of the presentation, I mentioned that we would ask for your help. Individuals, businesses, tax professionals, and all interested parties can direct systemic issues to TAS via the Internet to our SAMS system. SAMS is a system that tracks issues submitted to us by employees, practitioners, and taxpayers. If you find a policy or procedure of the IRS that needs change, please refer that issue to TAS through SAMS. You may go to www.irs.gov/advocate, click on the link What Is Systemic Advocacy? and follow the instructions for submitting an issue to the SAMS (Systemic Advocacy Management System) database. Keep in mind that recommendations should be those that impact large groups. SAMS is not the place to discuss individual taxpayer issues. Those are handled by the Local Taxpayer Advocates. Remember at the beginning of the presentation, I mentioned that we would ask for your help. Individuals, businesses, tax professionals, and all interested parties can direct systemic issues to TAS via the Internet to our SAMS system. SAMS is a system that tracks issues submitted to us by employees, practitioners, and taxpayers. If you find a policy or procedure of the IRS that needs change, please refer that issue to TAS through SAMS. You may go to www.irs.gov/advocate, click on the link What Is Systemic Advocacy? and follow the instructions for submitting an issue to the SAMS (Systemic Advocacy Management System) database. Keep in mind that recommendations should be those that impact large groups. SAMS is not the place to discuss individual taxpayer issues. Those are handled by the Local Taxpayer Advocates.

    14. 14 Reports to Congress Objectives Report and Annual Report Submitted to Congress without Treasury or IRS review At www.irs.gov/advocate The issues raised through SAMS have resulted in correcting systemic problems with IRS. If a problem requires a legislative solution, the National Taxpayer Advocate will recommend one in the Annual Report to Congress. By law the NTA is required to submit 2 reports to Congress each year. The Annual Report is submitted in December and discusses the most serious problems affecting taxpayers, the most litigated tax issues, and proposed changes to the law and the U.S. tax code. The objectives report submitted in June discusses TAS goals for the next fiscal year. The Annual Report to Congress has had a significant impact on tax administration. For example, the NTA played a major role in getting the law changed regarding the qualifying definition of a child. The Alternative Minimum Tax was been a major topic in the Annual Report and a recommendation for AMT repeal has been introduced in Congress. This is a prime example of the influence and attention the Annual Report to Congress receives on the Hill. The issues raised through SAMS have resulted in correcting systemic problems with IRS. If a problem requires a legislative solution, the National Taxpayer Advocate will recommend one in the Annual Report to Congress. By law the NTA is required to submit 2 reports to Congress each year. The Annual Report is submitted in December and discusses the most serious problems affecting taxpayers, the most litigated tax issues, and proposed changes to the law and the U.S. tax code. The objectives report submitted in June discusses TAS goals for the next fiscal year. The Annual Report to Congress has had a significant impact on tax administration. For example, the NTA played a major role in getting the law changed regarding the qualifying definition of a child. The Alternative Minimum Tax was been a major topic in the Annual Report and a recommendation for AMT repeal has been introduced in Congress. This is a prime example of the influence and attention the Annual Report to Congress receives on the Hill.

    15. 15 2006 Annual Report Beyond specific problems and recommendations, however, the primary theme of this years report is transparency of IRS information. Nina Olson The word transparent means readily understood and clear, easily detected or perfectly evident, and all of these definitions are relevant to tax administration and compliance. The Freedom of Information Act (FOIA) requires the IRS to make certain procedures and guidance available to the public. I credit the IRS with improving its compliance with FOIA requirements in recent years, but believe further improvements are warranted. Transparency benefits taxpayers because they know what legal standards and procedures the IRS is applying, and it benefits the IRS because we can improve our procedures when we receive meaningful feedback from informed taxpayers and practitioners. The word transparent means readily understood and clear, easily detected or perfectly evident, and all of these definitions are relevant to tax administration and compliance. The Freedom of Information Act (FOIA) requires the IRS to make certain procedures and guidance available to the public. I credit the IRS with improving its compliance with FOIA requirements in recent years, but believe further improvements are warranted. Transparency benefits taxpayers because they know what legal standards and procedures the IRS is applying, and it benefits the IRS because we can improve our procedures when we receive meaningful feedback from informed taxpayers and practitioners.

    16. 16 2006 Annual Report Most Serious Problems AMT for Individuals Federal Tax Gap The 2006 Annual Report to Congress, which was released to the public January 9, 2007, identifies the alternative minimum tax for individuals (AMT) and the federal tax gap as the most serious problems facing taxpayers. Although these and many other issues covered in the 2006 Annual Report to Congress have been discussed in previous reports, there are new wrinkles in all of them, if only because these problems become aggravated if they are not addressed early on. AMT for individuals I consider the AMT the most serious problem both in its own right and because it symbolizes the broader problem of tax-law complexity. Federal Tax Gap The tax gap remains a high priority because noncompliance by some taxpayers requires compliant taxpayers to pay, on average, over $2,200 a year more to subsidize that noncompliance. The 2006 Annual Report to Congress, which was released to the public January 9, 2007, identifies the alternative minimum tax for individuals (AMT) and the federal tax gap as the most serious problems facing taxpayers. Although these and many other issues covered in the 2006 Annual Report to Congress have been discussed in previous reports, there are new wrinkles in all of them, if only because these problems become aggravated if they are not addressed early on. AMT for individuals I consider the AMT the most serious problem both in its own right and because it symbolizes the broader problem of tax-law complexity. Federal Tax Gap The tax gap remains a high priority because noncompliance by some taxpayers requires compliant taxpayers to pay, on average, over $2,200 a year more to subsidize that noncompliance.

    17. 17 2006 Annual Report Most Serious Problems Transparency of IRS True Costs and Benefits of Private Debt Collection Early Intervention in IRS Collection Cases By statute, the National Taxpayer Advocate is required to identify at least 20 of the most serious problems encountered by taxpayers. Seven of the most serious problems encountered by taxpayers discussed in this years report relate to IRS collection policies By statute, the National Taxpayer Advocate is required to identify at least 20 of the most serious problems encountered by taxpayers. Seven of the most serious problems encountered by taxpayers discussed in this years report relate to IRS collection policies

    18. 18 2006 Annual Report Key Legislative Recommendations Revise Congressional Budget Procedures to Improve IRS Funding Decisions Repeal Private Debt Collection Provisions Improve Uniform Definition of Qualifying Child Eliminate (or Simplify) Phase-Outs Increase Exempt Organizations Return Filing Threshold Among 15 legislative recommendations, the report proposes that Congress revise its budget procedures to improve IRS funding decisions. The report states the current federal budget procedures treat the IRS as a classic government-spending program and pit the IRS dollar-for-dollar against many other federal programs for resources. The report points out, however, that the IRS is effectively the accounts receivable department of the federal government, collecting $2.24 trillion a year on a budget of $10.6 billion a 210:1 return on investment. Studies show that each additional dollar appropriated for the IRS would generate far more than a dollar in additional federal revenue. The report suggests a set of guidelines for making IRS funding decisions that recognizes the IRSs unique role as the revenue generator for the federal government and seeks to maximize tax compliance, especially voluntary tax compliance, with due regard for protecting taxpayer rights and minimizing taxpayer burden. Among 15 legislative recommendations, the report proposes that Congress revise its budget procedures to improve IRS funding decisions. The report states the current federal budget procedures treat the IRS as a classic government-spending program and pit the IRS dollar-for-dollar against many other federal programs for resources. The report points out, however, that the IRS is effectively the accounts receivable department of the federal government, collecting $2.24 trillion a year on a budget of $10.6 billion a 210:1 return on investment. Studies show that each additional dollar appropriated for the IRS would generate far more than a dollar in additional federal revenue. The report suggests a set of guidelines for making IRS funding decisions that recognizes the IRSs unique role as the revenue generator for the federal government and seeks to maximize tax compliance, especially voluntary tax compliance, with due regard for protecting taxpayer rights and minimizing taxpayer burden.

    19. 19 Major Focus for 2007 Rules Governing the Use or Disclosure of Tax Return Information by Return Preparers New Partial Payment Requirement with Submissions of Offers in Compromise Guidance on Non-Hardship Effective Tax Administration Offers Private Debt Collection Initiative Rules Governing the Use or Disclosure of Tax Return Information by Return Preparers. The statute and regulations governing what tax preparers may do with confidential tax return information they receive from their clients were written in the 1970s. Olson advocates for limiting the use and disclosure of tax return information solely to instances where it is necessary for tax-administration purposes. New Partial Payment Requirement with Submissions of Offers in Compromise. A taxpayer who is unable to pay his or her tax liability in full may seek to compromise the debt by submitting an offer in compromise. The offer program is a good deal for both the government and the taxpayer. Guidance on Non-Hardship Effective Tax Administration Offers. The IRS should make this guidance public to assist taxpayers and their representatives in determining whether they may qualify for relief and to make clear what standards they need to meet. Private Debt Collection Initiative. In FY 2007, Olsons office will monitor the initiative closely with respect to both specific cases and systemic issues and will immediately share any significant observations or concerns with the IRS and the Congress. Rules Governing the Use or Disclosure of Tax Return Information by Return Preparers. The statute and regulations governing what tax preparers may do with confidential tax return information they receive from their clients were written in the 1970s. Olson advocates for limiting the use and disclosure of tax return information solely to instances where it is necessary for tax-administration purposes.New Partial Payment Requirement with Submissions of Offers in Compromise. A taxpayer who is unable to pay his or her tax liability in full may seek to compromise the debt by submitting an offer in compromise. The offer program is a good deal for both the government and the taxpayer. Guidance on Non-Hardship Effective Tax Administration Offers. The IRS should make this guidance public to assist taxpayers and their representatives in determining whether they may qualify for relief and to make clear what standards they need to meet. Private Debt Collection Initiative. In FY 2007, Olsons office will monitor the initiative closely with respect to both specific cases and systemic issues and will immediately share any significant observations or concerns with the IRS and the Congress.

    20. 20 Other TAS Programs Taxpayer Advocacy Panel (TAP) Independent panel of citizen volunteers Suggests ways of improving IRS Contact TAP at 1-888-912-1227 or www.improveirs.org TAS also provides support to two independent programs: the Taxpayer Advocacy Panel and the Low Income Taxpayer Clinics. TAS also provides support to two independent programs: the Taxpayer Advocacy Panel and the Low Income Taxpayer Clinics.

    21. 21 Other TAS Programs Low Income Taxpayer Clinics (LITC) Controversies with IRS Limited English Proficiency Find the nearest location at www.irs.gov/advocate Represents low income taxpayers before the IRS and tax court for free or nominal charge. These clinics are also located throughout the country. Represents low income taxpayers before the IRS and tax court for free or nominal charge. These clinics are also located throughout the country.

    22. 22 How To Contact TAS Phone or fax Local Taxpayer Advocates listed in Publication 1546 NTA toll free number -- 1-877-777-4778 Form 911 (Download from Web): www.irs.gov/advocate

    23. 23 Questions?

    24. 24 THANK YOU! For Helping Us Help Taxpayers