Last week, it was again time for National Taxpayer Advocate Nina Olson to roll out yet another congressionally-mandated report detailing 20 of the biggest problems facing taxpayers.What’s impressive is that, for yet another year, her beefs were so fresh.
A year ago at this time, Olson was pontificating on the evils of the Internal Revenue Service’s Questionable Refund Program, after her office had seen a significant increase in the number of people seeking to help claim refunds frozen with little to no explanation. Within the month, the IRS announced that it would undertake a major review of that program. Within two months, the agency outlined a number of steps it would take to overhaul the program.
Of course, that was just one of the 20 significant problems Olson has to outline each year. Last year, she also focused on outlining a number of specific legislative recommendations -- a chief piece of which were recommendations that the tax code be revised to incorporate six core principles as part of a simplification.
That complaint, of course, remains unaddressed. And the lame-duck congressional session that resulted in the late passage of the Tax Relief and Health Care Act of 2006 -- which in turn, has created a bit of an administrative nightmare for the IRS -- mostly serves to reinforce the fact that Congress is always going to move at the pace it pleases.
Which makes it all the better that Olson has moved on to outlining other problems a year later. This year, her office released a somewhat scaled-down version of the report (some 80 pages, as opposed to last year’s nearly 400), all of which still focus on the big problems affecting taxpayers, but in as manageable a light as any document that comes out of a Washington office.
This year’s report designates the alternative minimum tax and the federal tax gap as the most serious problems facing taxpayers, the first of which seems likely to be addressed in some fashion by a Democratically-controlled Congress, and the second which has already become fodder for politically grandstanding on Capitol Hill.
But Olson saves most of her ammunition for concerns over the IRS’s collection policies and the transparency of IRS information to the tax-paying public. In other words, the use of private collectors by the agency coupled with the very real threat that the agency isn’t doing enough to protect confidential taxpayer records.
Both should serve as meaningful beefs to even the most average of taxpayer in an age where privacy concerns are becoming more and more pronounced.
The pilot debt collection program is the very definition of the old joke about a camel being a horse built by committee. To assist the agency in collecting back taxes, the 2004 American Jobs Creation Act authorized the IRS to hire private firms to collect federal tax debts. While IRS Commissioner Mark Everson has openly admitted that the program will cost more than the agency simply hiring more tax collectors, under federal budget rules, money spent to hire collectors is treated as a discretionary expense, which Congress has been forced to cut.
The privatized program is outside the budget rules because, except for the start-up costs, the collectors will be paid from the proceeds.
After a squabble broke out over the awarding of the collection project last summer, no major problems stemming from the project have yet arisen in the public eye. But, much like the protection of taxpayer records, it seems like a public gaffe is just a game of numbers. For years the Government Accountability Office has questioned the IRS’s progress on moving forward with the modernization of its systems, and with the number of both federal and private organizations that have had trouble with keeping client information private -- well, call me a pessimist, but it seems the agency is due for a public gaffe.
Olson’s smart to concentrate on the smaller clamors she can convincingly make and the battles she can actually influence, all the while keeping her eye on bigger prizes like the future of the AMT. Taking a look back even a year ago, you can see the progress her office has been able to make. And that’s an impressive thing.
Links to Olson’s full reports are available at www.irs.gov/advocate/article/0,,id=97404,00.html.
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