Monday, March 2, 2009

It has been recommended that the 20% deposit on OICs be dropped.
IRS, National Taxpayer Advocate Testify on Recent Tax Compliance Challenges Facing Taxpayers and IRS

IRS Deputy Commissioner for Services and Enforcement Linda Stiff testified on how the IRS is assisting financially struggling taxpayers at a House Ways and Means Oversight Subcommittee hearing on February 26. National Taxpayer Advocate Nina Olson also testified before the subcommittee on obstacles that taxpayers are experiencing when seeking assistance from the IRS.

IRS Help for Struggling Taxpayers

Stiff testified about the range of services that the IRS is using to help taxpayers facing financial difficulty in paying their tax bill or understanding their tax obligations. According to Stiff, the IRS has given "frontline collection personnel" greater flexibility to work with taxpayers who may owe taxes, especially previously compliant taxpayers. She added that the IRS has also given employees more leeway to work with taxpayers who have minimal documentation.

Depending on the circumstances, Stiff also said that taxpayers may be able to adjust payments for back taxes, avoid defaulting on a payment agreement or possibly defer collection action. Additionally, IRS personnel are offering installment agreements and offers-in-compromise (OIC) and other added flexibility for missed payments.

IRS Programs

Stiff also reported that the IRS in 2009 added a "What If's?" section to its website to answer taxpayers' commonly asked questions on a variety of issues, including job loss and home ownership. According to Stiff, the IRS is also trying to modernize its systems to expedite refunds.

Room for Improvement

Olson testified that the IRS's procedures discourage taxpayers from using collection alternatives like offers-in-compromise (OIC) and partial payment installment agreements. Based on fiscal year (FY) 2008 data, Olson reported that only one out of 78 delinquent accounts was granted a collection alternative by the IRS. Olson reported that, while the number of offers has declined, so too has the number of accepted offers. In response to questions from panel members, Olson criticized the IRS's collection alternatives as being inaccessible to taxpayers.

According to Olson, the OIC program is almost obsolete because taxpayers are unable to use it under current IRS guidelines. She responded to inquiries from panel members about how to enhance the OIC program by suggesting that the IRS eliminate the 20-percent down payment requirement and engage in "vigorous outreach" on the program.

1 comment:

Anonymous said...

Sure Ms. Olson has talked about the IRS's shortcomings, ruffled a few feathers, and wrote some tough reports. Unfortunately, Ms. Olson has not been able to get very much accomplished in her seven years on the job other then create a high employee turnover rate. She tried to simplify the tax code by creating a standard definition of a child. When all was said and done, she only made matters worse. So much worse, the law had to be amended.

Ms. Olson also destroyed the very program in the IRS that was set up to assist taxpayers. Before Ms. Olson, if you needed help with a tax problem that was not dealt with satisfactorily through normal channels the IRS would transfer your case over to a group that had the experience in your particular issue and the authority to fix your problem on the spot. Ms. Olson has forsaken this logic. Now if you need help and your case is transferred over to her program it will most likely be assigned to someone that is not experienced or even properly trained to assist you. Moreover, even if the employee understands your situation they will not be able to fix it. They will have to turn around and request the IRS to fix it. Not only is this a poor way to assist taxpayers it also costs taxpayers more money.

The Taxpayer Advocate's office has an important role of advocating for all taxpayers. While Ms. Olson does an adequate job of this, she does not advocate very well for the individual taxpayer who comes into her office for assistance. For that reason, her employees that work with taxpayers should be reassigned back to the IRS where they will be better trained and better able to quickly assist taxpayers in their moment of need.