Literature Reviews

The National Taxpayer Advocate is releasing this Volume III of literature reviews as a supplement to her 2016 Annual Report to Congress. These literature reviews contain additional commentary and an extensive listing of articles, reports, and discussions providing a broader context for seven of the Most Serious Problems presented in Volume I.  To better understand the problems and burdens currently faced by taxpayers and develop effective remedies, it is helpful to look beyond the customer experience within the IRS.

The National Taxpayer Advocate hopes this resource inspires further informed conversation and research about strengthening taxpayer rights and developing innovative customer-centric tax administration.

As the National Taxpayer Advocate has repeatedly demonstrated, tax administrations in different countries can learn from each other with respect to a wide range of issues.  A survey of taxpayer services in other jurisdictions reveals the widespread belief that effective taxpayer service enhances voluntary compliance.  The Organization for Economic Cooperation and Development (OECD) reports indicate, among other things, that an expanded role of tax administrations, accompanied by reductions in resources, has often resulted in a shift to online services, but with an inadequate understanding of taxpayer preferences.  Effective taxpayer service requires multiple service channels.  Customer service in non-tax areas of government and in private industry is becoming more digital, but personal contact remains a pillar of service delivery.

Read the full literature review

In 2014, the IRS adopted the Taxpayer Bill of Rights (TBOR), heralding it as “a cornerstone document to provide the nation’s taxpayers with a better understanding of their rights.”  Prior to the adoption of the TBOR, a TAS survey revealed that taxpayers had little knowledge of their rights — fewer than half of taxpayers believed they have rights before the IRS and only 11 percent said they knew what those rights were. The National Taxpayer Advocate had long called for the IRS to adopt a TBOR as a framework for effective tax administration and for Congress to add the list of fundamental taxpayer rights to the Internal Revenue Code (IRC), which Congress did in late 2015.

In order to develop a vision for how the IRS could better implement and apply the TBOR, this Literature Review will analyze other countries’ experience with implementing and adhering to taxpayer rights. This discussion will include citizen charters focusing on rights as well as service, and will devote particular attention to taxpayer charters in the United Kingdom and Australia.

Read the full literature review

The National Taxpayer Advocate has long recommended the IRS conduct behavioral research on ways to improve voluntary tax compliance. The President also recently issued an Executive Order encouraging agencies to apply behavioral science insights to advance policy goals. For example, the IRS could use these insights to improve tax compliance by making it easier, or by making the agency’s messages clearer, more relevant, and more likely to resonate with taxpayers. These insights could improve the effectiveness of alternatives to enforcement (called “alternative treatments”).

Read the full literature review

The National Taxpayer Advocate has long emphasized the importance of the IRS maintaining a local presence in both service and compliance operations. By having a local presence in the community, tax agencies are better equipped to improve tax morale by successfully encouraging voluntary compliance, creating a culture of compliance, and influencing prevailing social views in a locale. Voluntary tax compliance relies heavily on taxpayer discretion, integrity, and honesty. There is evidence that improvements in tax morale may be as important to tax compliance as tax enforcement. Local presence offers the advantage of having employees who are completely familiar with the local economy, culture, and social norms. Geographic presence is key to that service provision, creation of the trust culture, and promoting that understanding.

Read the full literature review

As the IRS incorporates an online account system into its Future State strategy, it is helpful to evaluate the experience of other organizations in private industry and government. This literature review covers various online services offered by foreign tax administrations as well as private industry reports on best practices. While the research shows a clear trend toward moving more services online, there is also a trend to continue to provide multi-channel options. The most pervasive best practice covered in the research is the need for organizations to understand the needs of the customer and let those needs drive the changes, rather than business or budget needs.

Read the full literature review

Alternative dispute resolution (ADR) is the process of resolving a dispute through non-judicial means, typically by placing the case in non-binding mediation or in binding arbitration. These proceedings are generally conducted by neutral parties, such as mediators, administrative law judges (ALJs), or ombudsmen. As will be developed in this literature review, researchers, commentators, and stakeholders have published substantial in-depth analysis regarding the effectiveness and flexibility of ADR in a variety of contexts. Studies in this area demonstrate that efficient ADR can have a beneficial impact on tax compliance and tax administration. Moreover, ADR has been widely embraced by businesses, various federal agencies, and tax authorities of certain foreign countries.

Read the full literature review

Over the past decade, fraud and identity theft have increasingly plagued consumers, businesses, and financial institutions. The IRS has also been impacted. In order to detect and prevent identity theft and potentially false wages and withholdings, the IRS established a complicated screening process. When a return is flagged by one of the multiple systems that scrutinize returns for characteristics of refund fraud or identity theft, the refund is stopped from being issued until the taxpayer can authenticate his or her identity or until the information on the return can be verified. Some returns flagged by these systems turn out to be false positives.

The National Taxpayer Advocate has consistently advocated for taxpayers whose legitimate refunds have been wrongly selected and unreasonably delayed with IRS Refund Fraud and Identity Theft Programs. This literature review explores the acceptable false positive rates in the public and private sectors and steps that can be taken to reduce false positive rates.

Read the full literature review

Read All Literature Reviews