On Wednesday, January 12, 2022, I launched the Nationwide Taxpayer Advocate’s 2021 Annual Report back to Congress and the fifth version of the Nationwide Taxpayer Advocate’s Purple E book, which presents legislative suggestions designed to strengthen taxpayer rights and enhance tax administration for all taxpayers.
There isn’t a method to sugarcoat the yr 2021 in tax administration. It was probably the most difficult yr taxpayers and tax professionals have ever skilled – lengthy processing and refund delays, problem reaching the IRS by telephone, correspondence that went unprocessed for a lot of months, assortment notices issued whereas taxpayer correspondence was awaiting processing, restricted or no data on the The place’s My Refund? device for delayed returns, and – for full disclosure – problem acquiring well timed help from TAS.
To its credit score, the IRS carried out nicely beneath troublesome circumstances. For the reason that begin of the pandemic, it has carried out vital applications enacted by Congress, together with issuing 478 million Financial Affect Funds totaling $812 billion and sending Advance Youngster Tax Credit score (AdvCTC) funds to over 36 million households totaling over $93 billion.
Nonetheless, taxpayer service was the worst it’s ever been. The mix of processing delays and questions on new applications such because the AdvCTC brought on IRS phone name volumes to nearly triple to 282 million calls, and customer support representatives answered simply 11 % of these calls. Taxpayers and tax professionals had been understandably annoyed and dissatisfied. In spite of everything, it’s troublesome to adjust to the tax legal guidelines when you possibly can’t get your query answered in a well timed method.
Alongside the identical traces, the IRS took months to course of taxpayer responses to notices, additional delaying refunds. It took a mean of 199 days for the IRS to course of taxpayer responses to proposed changes, up from 74 days in fiscal yr 2019, the newest pre-pandemic yr. In lots of instances, if the IRS didn’t course of a taxpayer response, automated processes took opposed motion or didn’t launch the refund. And when taxpayers tried to test the standing of their refunds on the The place’s My Refund? device greater than 632 million occasions final yr, the device too usually didn’t present data on unprocessed returns or clarify standing delays, the explanations for delays, the place the returns stood within the processing pipeline, or what actions taxpayers wanted to take, if any.
We’ve got written in depth about these points in our Annual Report back to Congress, the place we determine the ten Most Critical Issues taxpayers are dealing with this yr: processing and refund delays; worker recruitment, hiring, and coaching; phone and in-person taxpayer service; transparency and readability; submitting season delays; limitations of on-line taxpayer accounts; limitations in digital taxpayer communications, together with e-mail; e-filing boundaries; correspondence audits; and the influence of assortment insurance policies on low-income taxpayers. We additionally make administrative suggestions to the IRS to contemplate in tackling the issues.
By statute, we tackle the ten tax points most litigated in federal courtroom. Traditionally, TAS utilized industrial authorized analysis databases to evaluate printed opinions in a number of courts to find out the ten most litigated points. To achieve a broader view of tax litigation, this yr TAS used a hybrid methodology by additionally reviewing the roughly 28,000 taxpayers petitioning Tax Courtroom in fiscal yr (FY) 2021. We consider analyzing the problems raised within the discover of deficiency for hundreds of Tax Courtroom petitions gives a extra correct view of litigation points reasonably than analyzing a number of hundred issued opinions.
Within the Purple E book, I suggest 68 legislative suggestions for consideration by Congress. Whereas these don’t cowl each concern, we expect Congress can and may contemplate them to deal with the problems we’ve got recognized. These suggestions embody however usually are not restricted to:
- Offering enough funding for the IRS to enhance taxpayer service and modernize its data expertise techniques;
- Extending the interval for receiving refunds when the IRS postpones the tax submitting deadline, because it did in 2020 and 2021 as a result of pandemic;
- Authorizing the IRS to determine minimal requirements for paid tax return preparers;
- Increasing the U.S. Tax Courtroom’s jurisdiction to listen to refund instances;
- Restructuring the Earned Earnings Tax Credit score (EITC) to make it less complicated for taxpayers and cut back improper funds;
- Amend IRC §6402(a) to ban offset of the Earned Earnings Tax Credit score portion of a tax refund; and
- Increasing the safety of taxpayer rights by strengthening the Low Earnings Taxpayer Clinic program.
A particular because of your complete Annual Report back to Congress staff and all TAS and IRS workers who had a job within the report’s improvement and supply. There are numerous who contribute to the report’s success. I’m particularly appreciative of their time, dedication, and experience. It is a staff effort all year long to get this report delivered to Congress in January.
We in TAS proceed to be the advocate for the taxpayer. This report is among the instruments we use to encourage the IRS to implement administrative modifications and Congress to contemplate the way it can change legal guidelines for the advantage of the taxpayer. I encourage you to take a second to look by the 2021 Annual Report back to Congress (or perhaps the Government Abstract) and the 2022 Purple E book and begin a dialogue on how collectively we will work in direction of bettering taxpayer service and tax administration.
On a tragic word, I want to acknowledge the passing of Invoice Hoffman, long-time senior IRS reporter for Tax Notes. We in TAS have labored with Invoice for a few years, and Invoice coated our annual reviews intimately and was at all times open to beginning a dialogue. Invoice by no means minced phrases, requested questions his interview topics didn’t wish to hear, and sharply questioned IRS insurance policies and procedures. But it surely was all finished to assist the general public higher perceive the workings of tax administration and pinpoint areas the place IRS procedures had been falling wanting assembly taxpayers’ wants and expectations. He will probably be missed.
