Washington, D.C. - The Internal Revenue Service's Office of Chief Counsel should improve the timeliness of the private letter rulings it issues and reduce the number of rulings issued, according to a new report from the Treasury Inspector General for Tax Administration. Delays in providing private letter rulings can substantially increase taxpayer burden because PLRs are generally needed before the taxpayer files a tax return and could result in a delayed tax return filing or amended returns, as well as additional accounting fees.

In addition, the chief counsel office could potentially reduce the number of PLRs requested by issuing more published guidance that would benefit a greater number of taxpayers.

TIGTA determined that chief counsel personnel did not always timely contact taxpayers after case assignment to discuss the taxpayer's issues. In addition, the PLR cases sampled for review were not always closed by chief counsel personnel in a timely manner.


Washington, D.C. - The Internal Revenue Service is trying to decide whether it should make so-called "soft notices" a permanent part of its automated program for encouraging more voluntary compliance. A soft notice is a written notice on Form CP 2057, which requires no action on a taxpayer's part but encourages them to check their return for errors.

A new TIGTA report recommended that the IRS should improve its plan to determine whether the soft notices should be used permanently in the IRS's Automated Under-reporter Program. The TIGTA audit was initiated because the IRS is involved in a multi-year initiative to determine if soft notices can address under-reporting discrepancies.

The AUR Program identifies income discrepancies between types of information received by the IRS: information provided by taxpayers and related information provided by employers and financial institutions.

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