INTRODUCTION: The National Taxpayer Advocate’s Remarks on the Role of Trust and Taxpayer Advocate Service in Fostering Tax Compliance
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Volume 1, which I present to you today, includes an analysis of the 2019 Filing Season, an assessment of the impact of the recent government shutdown on the Taxpayer Advocate Service (TAS), 12 Areas of Focus, and a discussion of TAS advocacy initiatives, casework, and research studies. Volume 2, IRS Responses and National Taxpayer Advocate’s Comments Regarding Most Serious Problems Identified in 2018 Annual Report to Congress, and Volume 3, Making the EITC Work for Taxpayers and the Government: Improving Administration and Protecting Taxpayer Rights, will be published next month.
Volume 2 will contain the IRS’s general responses to each of the administrative recommendations we identified in our 2018 Annual Report to Congress. Volume 3 will contain a comprehensive assessment of the Earned Income Tax Credit (EITC) and will make recommendations designed to increase the participation rate of eligible taxpayers and reduce overclaims by ineligible taxpayers. During the spring, Professor Leslie Book of the Villanova School of Law, a leading EITC expert, served as a “professor in residence” with TAS, and Margot Crandall-Hollick, an EITC expert with the Congressional Research Service, worked with TAS on a detail. Together with TAS’s EITC experts, including former Low Income Taxpayer Clinic attorneys and researchers, they conducted a broad review of existing EITC research and drafted a comprehensive set of recommendations to assist Congress and the IRS in improving the program.
The last and most creative component of this year’s Objectives Report, The Taxpayer Roadmap 2019: An Illustration of the Modern United States Tax System, also will be released in July. This roadmap—which actually will be in the form of a subway map—builds upon the seven discrete roadmaps we published in the 2018 Annual Report to Congress . This new roadmap—available in hard copy (32” by 32”) and in digital format—shows, at a high level, the taxpayer’s “journey” through the tax system—from getting answers to tax law questions and preparing a return, through return processing, audit, appeals, litigation, and collection .
Anyone looking at this map will understand that we have an incredibly complex tax system that is almost impossible for the average taxpayer to navigate. I personally have spent dozens of hours designing and preparing this map, as have many members of my staff. For every step shown on the map, there are tens of steps and interactions that are impossible to represent in a single document. Thus, TAS is working to develop a digital roadmap into which a taxpayer or practitioner will be able to input the document number of any IRS letter or notice and receive a plain English summary of that letter or notice. From there, they can click through to the actual roadmap and see where they are. They can also learn more about that step in the tax process and the surrounding steps through pop-ups and links into additional TAS and IRS content, including links to TAS’s Taxpayer Bill of Rights content.
Since March 1, 2001, I have had the privilege and honor of serving as the nation’s National Taxpayer Advocate. I am enormously grateful for the opportunity I have had to advocate on behalf of our nation’s taxpayers. I have witnessed the dedication of IRS employees in administering a mind-numbingly complex Internal Revenue Code. Amazingly, despite the challenges of complying with our multi-million-word tax code, more than 150 million individual taxpayers and more than ten million business entities do their civic duty every year by filing income tax returns with the IRS. That is an extraordinary achievement, and one we should not take for granted.
But even as the system works for most taxpayers most of the time, it doesn’t work for millions of others. Since 2001, TAS has received more than four million cases from taxpayers who experienced significant hardship as a result of the way the IRS is administering the Internal Revenue laws. I am enormously proud of and grateful for the heroic efforts of TAS employees who, day in and day out, work to help taxpayers who are frustrated, frightened, and at wit’s end. It is no easy task to find solutions to problems TAS is statutorily charged with addressing, but our employees have done so with determination, empathy, and creativity.
Because this is my last Report to Congress, in the remainder of this Introduction I will discuss subjects that I believe warrant the closest scrutiny and congressional oversight. These include the following concerns:
- Taxpayer service levels are currently very poor, and the IRS does not appear to have a taxpayer centric strategy or a budget commitment to improve them.
- Research shows that forcing customers into self-service applications for anxiety-inducing transactions erodes trust and increases customer dissatisfaction.
- To increase taxpayer trust and improve compliance, taxpayer service should be designed around a “Taxpayer Anxiety Index.”
- If you don’t have taxpayer trust, you have to control (i.e.., more audits, more enforced collection).
- Appropriate use of an “Economic Hardship Indicator” would reduce anxiety, minimize taxpayer harm, reduce rework, and get to the right answer.
- There is no more important entity for achieving trust in the tax system than the Taxpayer Advocate Service.
I will also report on the status of my “short-list” of items for resolution with respect to TAS and the IRS before my retirement.
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