Taxpayer Advocate Report

NSTPInternal Revenue Service (IRS), Taxpayer

Taxpayer Advocate Report

IRS Taxpayer Advocate Service (TAS) dropped its annual report to Congress late last week. The two-volume report was issued with the accompanying list of legislative recommendations –the so-called Purple Book. Many of its issues and recommendations may be familiar from past reports.

The report makes a number of interesting contributions to understanding IRS. For the first time, TAS lays out its recommendations consistent with the so-called IRS “Pipeline,” namely: pre-filing, filing, and post-filing: examination, notices, collection, and litigation. Writing the report in this fashion should help congressional policymakers and appropriators understand better how IRS does its work.

Additionally, the report points out how collections areas such as the Automated Collection System and correspondence audits should be operated and funded as more service-oriented accounts management functions. Too often over the last decade, executive and congressional budgeteers have not funded these units when allocating resources, not realizing that by doing so they are harming taxpayers and their representatives who are in good faith attempting to contact the IRS to respond to notices and manage their tax bills. Finally, the report highlights the problems the president and Congress caused by shutting down the IRS (for example, increasing phone and correspondence wait times and hurting taxpayers in the midst of collection actions by the agency).

The report also notes that in 2018, more than half of the tax returns submitted by return preparers were from individuals who are unregulated by the IRS and that “it is a necessary part of the IRS’s duties to ensure that preparers are competent and accountable, since return preparers play such a critical role in tax administration and in promoting tax compliance.”

Consequently, among the “most serious problems” identified by the Taxpayer Advocate is the need for the public to be able to “differentiate between professional, competent, and experienced preparers and their incompetent or unscrupulous counterparts.”

The report concludes that, “Although the IRS is prohibited from requiring unregulated preparers to undergo testing, this does not mean that preparers cannot obtain certification voluntarily, as a way of differentiating themselves from their competition. The IRS can lead the effort in the development and review of training material used by third-party certification programs.”