It is not unusual for the IRS to overlook taxpayer’s rights. The recent scandal around Tea Party’s difficulties getting a tax-exempt status from the IRS is just one example that has become public and attracted everybody’s attention.
Being an essential part of the tax resolution process, here at 20/20 we often see cases where a mistake made by taxing authorities leads to the taxpayer’s financial liability that could have been avoided if people had a better understanding of their rights. A tax code is a complex document that makes very difficult for a regular taxpayer to navigate through the large amount of rules and regulations, and to apply them to a particular case without making a mistake. It becomes even more complicated when a mistake is made by the IRS, not only because correcting IRS errors is not an easy process, but also because it usually takes lots of taxpayer’s time to accomplish it.
In a mandatory mid-year report of the Taxpayer Advocate Service to Congress, a National Taxpayer Advocate, Ms. Nina E. Olson, emphasizes the importance of this issue and suggests possible actions that can be taken to resolve the situation. Taxpayer Advocate Service (TAS) is an independent organization within the IRS that is designed to look after taxpayer’s rights and to help taxpayers to resolve problems with the Service. It reports directly to Congress; no IRS employee, including the Commissioner of the Internal Revenue, has the right to preview this information before it is submitted.
In her report to Congress, that was released on June 26, 2013, Ms. Olson highlights the fact that the budget cuts have adversely affected the IRS’ ability to “administer the tax system in a manner that respects taxpayers’ rights”. She proposes that Congress grants adequate funds to the IRS to ensure appropriate training of the IRS collection apparatus that is supposed to have a deep knowledge of the Tax Code, the Taxpayer’s Bill of Rights, and the Internal Revenue Manual.
However, the most interesting proposal that has been made in this report is an item called “apology payments”. Ms. Olson suggests that the IRS makes a payment of $1,000 to each taxpayer that received unfair treatment from the Internal Revenue Service. TAS believes that these small gestures might not only serve as a small compensation for the taxpayer’s time spent on resolving a problem, but also help to improve public opinion about the US tax system as fair for everybody.
Although it is not clear whether or not this proposal will be accepted, especially now, when the IRS budget is deemed insufficient for essential operations, it was still very considerate of the Taxpayer Advocate Service to address the issue and try to find a way show taxpayers that it is not okay for the IRS to breach the Taxpayers Bill of Rights. It’s not being suggested that IRS employees necessarily do this intentionally, but it does happen, often to the detriment of the taxpayer. This is one of the reasons that it’s so important to have professional representation when dealing with the IRS.