Nina E. Olson, the National Taxpayer Advocate, recently released her 2017 Annual Report to Congress concerning tax administration issues and the challenges facing the Internal Revenue Service (IRS) in the wake of the current tax reform legislation. One significant issue is how the IRS will be able to perform the basic tasks of tax administration given the 20-percent cut to its funding since FY 2010.
"As the National Taxpayer Advocate, I see daily the consequences of reduced funding of the IRS and the choices made by the agency in the face of these funding constraints," Olson wrote in the preface to the report. "These impacts are real and affect everything the IRS does. Funding cuts have rendered the IRS unable to provide acceptable levels of taxpayer service, unable to update its technology to improve its efficiency and effectiveness, and unable to maintain compliance programs that both promote compliance and protect taxpayer rights. 'Shortcuts' have become the norm, and 'shortcuts' are incompatible with high-quality tax administration."
Preliminary estimates show that the IRS would require additional funding of $495 million in FY 2018 and 2019 in order to implement the latest reforms and develop guidance for taxpayers concerning new laws.
The report identifies 21 issues with recommendations for administrative change concerning private debt collection practices, online taxpayer accounts, taxpayer rights in audit and outside of audit, streamlined processes, passport denial and revocation, and other topics. Another section of the report analyzes the Top Ten most litigated issues in Tax Court, including:
- Accuracy-related penalties;
- Trade or business expenses;
- Summons enforcement;
- Appeals from Collection Due Process (CDP) hearings;
- Gross income;
- Failure-to-file and failure-to-pay penalties;
- Enforcement of federal tax liens;
- Charitable contribution deductions;
- Family status; and
- Relief from joint and several liability (innocent spouse claims).
As part of this year's Annual Report, Olson also released a new publication, "The Purple Book," which provides 50 recommendations for legislators to strengthen taxpayer rights and improve tax administration, in response to Congress' recent level of interest in assisting taxpayers.
To read the IRS Taxpayer Advocate's full report, click here: https://taxpayeradvocate.irs.gov/reports/2017-annual-report-to-congress/full-report