National Taxpayer Advocate Nina E. Olson urged the Internal Revenue Service to focus more broadly on steps to increase voluntary compliance.
In the first of her two required annual reports to Congress, she discussed the role that taxpayer service plays in facilitating voluntary compliance with the tax law, and cautioned that excessive focus on enforcement at the expense of taxpayer service could have the effect of both reducing voluntary compliance and alienating taxpayers.
"Today, the IRS's explicit and primary focus is on increasing its enforcement activity. While this goal is laudable, it is very narrow," she stated. "As Congress noted in [1998 legislation], the IRS is far more than an enforcement agency -- it must serve all taxpayers. Thus, the IRS should specifically state that its primary organizational goal is to increase voluntary compliance."
The Offer-in-Compromise program is one of the areas singled out for particular emphasis in fiscal year 2006. Olson noted that the Taxpayer Advocate Service continues to receive complains from taxpayers and practitioners concerning the IRS process for determining an acceptable offer amount, especially with regard to the application of allowable expense standards. Olson said that her office will work with the IRS on this and other OIC issues during the coming fiscal year.
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