National Taxpayer Advocate Nina Olson has released a report outlining her office’s priorities over the coming fiscal year, including improving Internal Revenue Service procedures to protect victims of tax-related identity theft and helping people who have lost their homes to foreclosure.
The report notes that the IRS has taken some steps to improve its procedures for handling identity theft, including developing an identity theft indicator and studying the creation of a centralized unit for identity theft cases.
Olson also wants to expand outreach to people whose homes have been foreclosed upon to educate them about the tax consequences they face from having their debts canceled. Taxpayers may exclude the amount of a canceled debt from gross income under certain circumstances, but to do so, they must file Form 982 with their tax returns. Few taxpayers file the form, however, and Olson’s office will focus on increasing public awareness of the rules and exceptions.
Olson’s office also plans to focus on IRS collection practices. It is concerned about the IRS resorting to seizures before all viable collection alternatives have been exhausted, under-utilization of partial-pay installment agreements, and excessive delays in collection that exacerbate taxpayer delinquency problems because of the accumulation of interest and penalties.
Other areas of emphasis identified in the report include monitoring the private debt collection program, working with the IRS to assist taxpayers with disproportionate tax liabilities due to the alternative minimum tax resulting from the exercise of incentive stock options, working with the IRS to address problems and inefficiencies in the correspondence examination program, and updating a 2003 report on the standards and structure of federal ombudsmen offices.
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