Yesterday, I submitted to Congress the National Taxpayer Advocate’s 2020 Annual Report and the fourth edition of the National Taxpayer Advocate’s Purple Book, which presents legislative recommendations designed to strengthen taxpayer rights and improve tax administration for all taxpayers.

A key change in this year’s annual report is that we’re including the IRS’s narrative response to each of the Most Serious Problems we identify. For the past several years, we’ve included the responses in the Objectives Report to Congress in June of the following year. Our intent in including them in our annual report is to help readers see the perspectives of both TAS and the IRS on the source and nature of key challenges and potential solutions.

I’d be remiss if I didn’t acknowledge the COVID-19 pandemic that has affected almost all facets of our lives, including U.S. tax administration. The IRS had to temporarily shut down its mail facilities, call centers, and Taxpayer Assistance Centers to follow social distancing guidelines and stay-at-home orders. This left some taxpayers without the resources they needed to comply with their tax obligations. The IRS also had to extend the filing season by three months, as well as stretch already-limited resources to issue two rounds of stimulus payments, as directed by Congress.

Despite the challenges, the IRS generally managed well. In general, it can effectively handle whatever it can automate, so most taxpayers were well served despite the limitations. But millions of taxpayers experienced major problems, including refund delays due to COVID-19-related processing backlogs, underpayments of stimulus payments, missing or late notices and letters, and an overall lack of information about ongoing issues.

The pandemic has pulled back the curtain on significant limitations the IRS faces with technology and with its workforce. This year’s Most Serious Problems touch on some of these issues, such as insufficient employee hiring and retention; inadequate telephone and in-person taxpayer service; limited functionality of online taxpayer accounts; and antiquated information technology. If you read the Most Serious Problems in combination, one overriding theme emerges: To improve taxpayer service, the IRS needs more resources to hire employees and more resources to modernize its information technology (IT) systems.

Other areas of the report include a final assessment of the extended 2020 filing season, a taxpayer rights assessment, a summary of key TAS systemic advocacy accomplishments, and a discussion of the ten federal tax issues most frequently litigated during the last year.

In the Purple Book, I propose 66 legislative recommendations for consideration by Congress. These recommendations include:

• Authorizing the IRS to establish minimum standards for tax return preparers;
• Expanding the U.S. Tax Court’s jurisdiction to hear refund cases;
• Restructuring the Earned Income Tax Credit (EITC) to make it simpler for taxpayers and reduce improper payments;
• Increasing the annual award cap for Low Income Taxpayer Clinics (LITCs);
• Requiring taxpayer consent before allowing IRS Counsel or Compliance personnel to participate in IRS Independent Office of Appeals conferences;
• Clarifying that taxpayers may raise innocent spouse relief as a defense in collection proceedings and bankruptcy cases; and
• Clarifying that the National Taxpayer Advocate may hire independent legal counsel.

I encourage you to read our 2020 Annual Report to Congress and Purple Book for a full assessment of the key issues taxpayers are facing and recommendations to resolve them.

Related Items: 

• Complete Report: 2020 Annual Report to Congress
• Executive Summary
• Purple Book