On July 15,
2015, the National Taxpayer Advocate, Nina Olson, issued her mid-year report
which she is required to do twice a year. For some time now, the IRS has been trying to
do its job with one hand tied behind its back as it struggles to deal with a
multi-year Congressional punishment program for a variety of crimes and
misdemeanors. From the Tea Party scandal to the fact that the IRS is just plain
fun to hate, Congressional funding for the tax agency is down about 17% on an
inflation-adjusted basis since FY 2010.
has told his people that their charge now is to do “less with less” ---“just do
the best you can, and don’t sweat the small stuff.If you drop a callwith
a taxpayer (euphemistically called “courtesy disconnects” by the IRS) even though
you have been on the phone with the taxpayer for an hour and a half, don’t
worry.They will call back.Just move on to the next case.”
report shows a dismal performance in the Taxpayer Service area with telephone
hold time rising close to thirty minutes and far below 50% success rates in
responding to calls from practitioners calling on the Priority Service Line,
taxpayers themselves calling customer service representatives, calls from
taxpayers inquiring about the Taxpayer Protection Program, as well as calls to
Not mentioned in
the mid-year report but painfully visible to tax controversy practitioners, the
Appeals function is no longer working their inventories of non-docketed
cases.These are cases in the pipeline
on which no agreement has been reached at the Examination level; the Internal
Revenue Manual still provides procedures which provide for an informal review
by an Appeals Officer before the issuance of a notice of deficiency which
triggers a filing requirement of a petition in the Tax Court.
In non-docketed status, the taxpayers enjoy
the advantage of negotiating with the IRS before it is lawfully permitted to
bill the taxpayer for the amount in dispute. At the same time, as long as the
taxpayer has agreed to extend the statute of limitations, taxpayers can proceed
with an Appeals Officer without the pressure of having to deal with an IRS
trial attorney who is nervously playing a juggling act settling an inventory of
cases which regularly appear on Tax Court calendars.
hardworking and understaffed Appeals offices are doing the best they can to
keep up with frequently issued Tax Court calendars. Now, what Appeals works on
is largely determined by the Tax Court. The Court is almost current in its
processing of new cases and it is at a very comfortable-to-manage approximately
eleven thousand new petitions at midyear for 2015.
midyear report notes that for the vast majority of filers it looks like
everything at the IRS is hunky dory.
“It should be
emphasized that more than 98 percent of all tax revenue collected by the IRS is
paid voluntarily and timely.Less than
two percent is collected through enforcement action….”
Also, the Report
finds, for the majority of taxpayers filing their returns without assistance
from the IRS, “the filing season was generally successful.”Ironically then, success can be measured in
part by those who tried to muddle through filing on their own or with the help
of a tax practitioner, simply because there was no need to contact the
government for assistance.
Obvious to any
practitioner, the greatest concern is what is not getting done
at the Service.While IRS-bashers in
Congress are having fun holding the IRS by the nose while others kick the
agency in the pants, the taxpayers and practitioners who have long standing
working relationships with the IRS are concerned about the future. The IRS does
a lot more than process tax payments. What about the private letter ruling
function, reviewing qualified plans in the employee benefits area, issuing tax
exemption letters to public service organizations,providing technical advice to agents in the
field,working their offer in compromise
inventories, and processing applications for innocent spouse determinations?
taxpaying public with time-sensitive business matters pending before the
Service, there is little consolation in knowing that their Congressmen are
enjoying big belly laughs every time they make the Service look bad in the
continues to be a shining light coming out of Washington.Her warnings should be well-heeded. The very
existence of our self-reporting tax system is at great risk.