Vince Nardone: Tax and Controversy

TAS Objectives for Fiscal Year 2010

  Guest Author: M. Pilar Honer, Esq., Columbus, Ohio 

On June 30, 2009, National Taxpayer Advocate, Nina E. Olson, submitted the Taxpayer Advocate Service’s (TAS) mid-year report to Congress that identified TAS’ objectives for fiscal year 2010. See the report attached below.  As background, TAS is an independent organization within the IRS that assists taxpayers who experience economic harm and are seeking help in resolving their tax problems, and whose problems have not been resolved through the normal channels of the IRS.  The mid-year report is one of two that TAS is required to submit to Congress each year.  This year’s mid-year report focused on the following objectives:

·         Improving taxpayer services,

·        Enhancing IRS oversight of federal tax-return preparers,

·        Improving the accessibility of the offer-in-compromise program, and

·        Working with the IRS to improve its ability to administer refundable tax credits effectively.

First, as to Taxpayer’s services, the report expressed concern about the IRS's sharp decline in telephone service and need for improvement.  TAS also suggested the IRS’ need to reinvigorate its efforts to pursue cross-functional, research-driven service improvements to implement the Taxpayer Assistance Blueprint­ (TAB).  TAB, originally initiated by Congress’ 2006 appropriations report, is a five-year strategic plan for taxpayer services that was formulated by the IRS and is administered by the IRS, the IRS Oversight Board, and TAS.  See page xi of TAS’ mid-year report for further detail.

Second, as to the oversight of tax-return preparers, the report notes the high percentage of tax-return preparers who fail to prepare accurate returns and the need for government to increase its efforts to protect taxpayers from those tax-return preparers. TAS recommended the following: (i) regulating unenrolled federal tax-return preparers by requiring initial testing and continuing professional education, (ii) increasing IRS enforcement actions against tax-return preparers who fail to perform due diligence or consciously facilitate noncompliance, and (iii) having return prepares use a unique Preparer Tax Identification Number (PTIN) on all returns, thereby making it easier to identify tax-return preparers submitting unreasonably high numbers of inaccurate returns.  

Third, the report addressed the need to improve the accessibility of the IRS's offer-in-compromise program.  TAS suggested that by making the OIC applications less cumbersome, taxpayers who legitimately qualify for OIC will not be deterred to apply.  The IRS has also recently announced the OIC Project Team, including TAS participation, that will examine the characteristics of qualified OIC applicants and increase the number of qualifying applicants. 

Finally, the report addressed the administrative problems presented by the credits that were either increased or introduced by the American Recovery and Reinvestment Act of 2009.  These include the earned income tax credit, the child tax credit, the “Making Work Pay” credit, the “American Opportunity” education tax credit, and the first-time home buyer credit.  The report notes that these refundable credits present an increased risk of fraud and therefore, the IRS will need to balance fraud prevention with the timely delivery of refunds.   As Olson stated

[i]f the IRS does not do enough to detect and prevent fraud, it may pay out billions of dollars as a result of false and fraudulent claims. On the other hand, if the IRS clamps down too tightly, hundreds of thousands and potentially millions of predominantly low income taxpayers will not receive timely refunds.

It will be interesting to see how these objectives will be executed during the 2010 tax year.  Whether the quality of taxpayer services will increase? Whether the number of tax-return preparers reprimanded will increase and then the number of inaccurate returns submitted decrease?  Whether the number of OIC’s accepted will increase?   Finally, whether the Service will properly handle the administration of the refundable tax credits?  TAS’ next report will be due on December 31, 2009.  This report will identify at least 20 of the most serious problems encountered by taxpayers, discuss the 10 tax issues most frequently litigated in the courts, and make administrative and legislative recommendations to resolve taxpayer problems.

See the attached Taxpayer Advocate Service’s mid-year report to Congress.

Download TAS Mid-year report

TAS Objectives for Fiscal Year 2010

  Guest Author: M. Pilar Honer, Esq., Columbus, Ohio 

On June 30, 2009, National Taxpayer Advocate, Nina E. Olson, submitted the Taxpayer Advocate Service’s (TAS) mid-year report to Congress that identified TAS’ objectives for fiscal year 2010. See the report attached below.  As background, TAS is an independent organization within the IRS that assists taxpayers who experience economic harm and are seeking help in resolving their tax problems, and whose problems have not been resolved through the normal channels of the IRS.  The mid-year report is one of two that TAS is required to submit to Congress each year.  This year’s mid-year report focused on the following objectives:

·         Improving taxpayer services,

·        Enhancing IRS oversight of federal tax-return preparers,

·        Improving the accessibility of the offer-in-compromise program, and

·        Working with the IRS to improve its ability to administer refundable tax credits effectively.

First, as to Taxpayer’s services, the report expressed concern about the IRS's sharp decline in telephone service and need for improvement.  TAS also suggested the IRS’ need to reinvigorate its efforts to pursue cross-functional, research-driven service improvements to implement the Taxpayer Assistance Blueprint­ (TAB).  TAB, originally initiated by Congress’ 2006 appropriations report, is a five-year strategic plan for taxpayer services that was formulated by the IRS and is administered by the IRS, the IRS Oversight Board, and TAS.  See page xi of TAS’ mid-year report for further detail.

Second, as to the oversight of tax-return preparers, the report notes the high percentage of tax-return preparers who fail to prepare accurate returns and the need for government to increase its efforts to protect taxpayers from those tax-return preparers. TAS recommended the following: (i) regulating unenrolled federal tax-return preparers by requiring initial testing and continuing professional education, (ii) increasing IRS enforcement actions against tax-return preparers who fail to perform due diligence or consciously facilitate noncompliance, and (iii) having return prepares use a unique Preparer Tax Identification Number (PTIN) on all returns, thereby making it easier to identify tax-return preparers submitting unreasonably high numbers of inaccurate returns.  

Third, the report addressed the need to improve the accessibility of the IRS's offer-in-compromise program.  TAS suggested that by making the OIC applications less cumbersome, taxpayers who legitimately qualify for OIC will not be deterred to apply.  The IRS has also recently announced the OIC Project Team, including TAS participation, that will examine the characteristics of qualified OIC applicants and increase the number of qualifying applicants. 

Finally, the report addressed the administrative problems presented by the credits that were either increased or introduced by the American Recovery and Reinvestment Act of 2009.  These include the earned income tax credit, the child tax credit, the “Making Work Pay” credit, the “American Opportunity” education tax credit, and the first-time home buyer credit.  The report notes that these refundable credits present an increased risk of fraud and therefore, the IRS will need to balance fraud prevention with the timely delivery of refunds.   As Olson stated

[i]f the IRS does not do enough to detect and prevent fraud, it may pay out billions of dollars as a result of false and fraudulent claims. On the other hand, if the IRS clamps down too tightly, hundreds of thousands and potentially millions of predominantly low income taxpayers will not receive timely refunds.

It will be interesting to see how these objectives will be executed during the 2010 tax year.  Whether the quality of taxpayer services will increase? Whether the number of tax-return preparers reprimanded will increase and then the number of inaccurate returns submitted decrease?  Whether the number of OIC’s accepted will increase?   Finally, whether the Service will properly handle the administration of the refundable tax credits?  TAS’ next report will be due on December 31, 2009.  This report will identify at least 20 of the most serious problems encountered by taxpayers, discuss the 10 tax issues most frequently litigated in the courts, and make administrative and legislative recommendations to resolve taxpayer problems.

See the attached Taxpayer Advocate Service’s mid-year report to Congress.

Download TAS Mid-year report