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Most Serious Problems Encountered By Taxpayers |
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National Taxpayer Advocate Nina E. Olson released annual report with the most serious problems encountered by taxpayers and the report lists the alternative minimum tax for individuals (AMT) and the federal tax gap, IRS collection policies and the transparency of IRS as the most serious problems facing taxpayers. They National Taxpayer Advocate is appointed by the Treasury Secretary and is charged with representing taxpayer interests before the IRS and Congress.
The full report describes 21 most serious problems, the IRS’s response, and the National Taxpayer Advocate’s final comments and recommendations. The list of problems are
- Alternative Minimum Tax for Individuals. This one is ranked number one. The AMT was designed to prevent wealthy taxpayers from escaping tax liability through the use of tax-avoidance transactions and most of these tax loopholes are closed. Today AMT affects many individuals especially those who are living in a high-tax states. If you are subject to AMT, you loose many deductions like state and local income taxes or sale tax, and property taxes that taxpayers are allowed to claim under the regular tax rules. You may not able to claim personal exemptions for childern.
- The Tax Gap. The second most serious problem. The issue is an average compliant taxpayer's tax dollar is used to subsidize noncompliance by others.
- Transparency of the IRS. More transparency is sought for the updates to the procedures and guidance, better publicity for the memos,etc.
- True Costs and Benefits of Private Debt Collection. There were lots of critism for this initiative from the very begining. The report questions the actual cost savings from the contract with the Private Debt Collection. The recomentation was to repeal it.
- Early Intervention in IRS Collection Cases. IRS currently takes more time to close the issues or even the resolved cases remain in 'open' status for prolonged periods, etc.
- IRS Collection Payment Alternatives. IRS does not fully utilize the available collection payment alternatives, such as installment agreements and offers in compromise, to resolve delinquent tax accounts.
- Levies.
- Centralized Lien Processing. After consolidating the Lien processing to Cincinnati campus in 2005, IRS experienced difficulty timely providing notice of appeal rights and timely releasing liens under the new lien processing structure. This cause hardship to taxpayers and increase the burden on IRS.
- Collection Issues of Low Income Taxpayers. The IRS fail to provide the meaningful services that low income taxpayers who need to meet their obligations regarding federal tax delinquencies.
- Excess Collections. The Excess Collections File (XSF) is a cumulative file within the IRS’s Integrated Data Retrieval System (IDRS) which reflects payments that either cannot be identified or cannot be applied to a specific taxpayer account.
- Small Business Outreach. There are about 45 million small business taxpayers and they must deal with complex tax laws and regulations in order to satisfy their tax obligations and filing requirements. Many of these taxpayers cannot afford professional services, and the IRS’s Small Business/Self-Employed division (SB/SE) is not adequately helping them understand and comply with their tax obligations. No wonder, about 44 percent of the tax gap is attributable to underreporting by self-employed taxpayers.
- Oversight of Unenrolled Return Preparers. Taxpayers are harmed by the absence of a comprehensive federal program to regulate unenrolled return preparers (i.e., those who are not Certified Public Accountants, attorneys, enrolled agents, or enrolled actuaries).
- Correspondence Delays.
- Disaster Response and Recovery.
- Concerns about the IRS Office of Appeals.
- Correspondence Examination.
- IRS Implementation of Math Error Authority Impairs Taxpayer Rights.
- Limited English Proficient (LEP) Taxpayers: Language And Cultural Barriers To Tax Compliance.
- Taxpayer No Response Rates.
- Reasonable Accommodations for Taxpayers with Disabilities.
- Injured Spouse Allocations.
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Last Updated ( Thursday, 24 January 2008 )
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