Taxpayer Advocate Not Happy Revenooer Rants

In her annual report to Congress, National Taxpayer Advocate Nina Olson paints a bleak picture of the IRS, in general, and its interaction with taxpayers.  She emphasizes four broad areas of concern:

  • The budget environment of the last five years has resulted in a “devastating erosion of taxpayer service.”  (No argument from us on that one, for sure!)
  • The lack of effective administration and congressional oversight, in conjunction with the failure to pass taxpayer rights legislation, has eroded taxpayer protections enacted more than 16 years ago.
  • The combined effect of these trends is reshaping tax administration in ways that are “not positive for future tax compliance or for public trust in the fairness of the tax system.”
  • This “downward slide” can be addressed if Congress makes an “investment” in the IRS and holds it accountable.

Some of the “most serious problems” identified by the Advocate include:

  1. The IRS does not have a rigorous methodology for making the difficult resource allocation decisions required by today’s tight budget environment.
  2. Notwithstanding the “tremendous progress” made by IRS in dealing with the tax implications of  Obamacare, lots needs still to be done, including the whole process of accounting for and reconciling the proper amounts of “Advance Premium Tax Credits” which will become a here and now challenge within the next few weeks.
  3. The whole penalty situation – the law contained only 14 in 1955, with the number ballooning to today’s more than 170 such provisions!  And the Advocate notes that more than 20 years ago, Congress recommended that the IRS ‘develop better information concerning the administration and effects of penalties’ to ensure they promote voluntary compliance.  But what have we got now?  The Advocate states, “The IRS Office of Service-wide Penalties (OSP) is an office of six analysts buried three levels below the Small Business/Self-Employed Division Commissioner (that) cites insufficient resources, insufficient staffing, employees with the wrong skill sets, and a lack of access to penalty-related data as barriers to conducting penalty research.’  (Sound like the government you’ve come to know and love?)

And finally, this week, comes word from our friends at the Tax Foundation that for we

and thee, slogging away here in Nevada, “Tax Freedom Day” (the date by which folks have finally earned enough dough to allow them to pay their total tax bill for the year) arrived on April 15 itself, in 2014.

With all of the wrangling about to begin between the governor and the Nevada legislature, though, no doubt the magic date will lag a bit later in the coming years.  Stay tuned.

CONSULT YOUR TAX ADVISOR –  This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.

Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno.  He may be reached at 831-7288, welcomes comments at jquinn@ashleyquinncpas.com, and invites readers to consider his other commentary at http://blog.nolo.com/taxes.

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