National Taxpayer Advocate Nina E. Olson today released her 2018 Annual Report to Congress, describing challenges…
Every year, the National Taxpayer Advocate’s Annual Report to Congress identifies at least 20 of the nation’s most serious tax problems. These issues can affect taxpayers’ basic rights and the ways they pay taxes or receive refunds, even if they’re not involved in a dispute with the IRS.
As your voice at the IRS, the National Taxpayer Advocate uses the Annual Report to elevate these problems and recommend solutions to Congress and the highest levels of the IRS.
As part of the report, the Advocate has released the second edition of “The Purple Book,” which presents 58 legislative recommendations intended to strengthen taxpayer rights and improve tax administration. Many of the recommendations have been made in detail in prior National Taxpayer Advocate reports, but others are presented in this publication for the first time.
During the last few years, Congress has showed renewed interest in examining and improving the operations of the IRS. The House Ways and Means Subcommittee on Oversight has held several hearings to consider “IRS reform,” and the House passed the Taxpayer First Act of 2018 by a unanimous vote of 414-0 last April. Several bills to improve IRS operations were also introduced in the Senate. Although none of these bills ultimately was enacted and the National Taxpayer Advocate does not endorse every provision in every bill, the report says these bills overall would go a long way toward helping taxpayers and modernizing the IRS, and it urges Congress to again consider comprehensive tax administration legislation in 2019. The Purple Book is designed to assist the tax-writing committees in their efforts by offering a wide range of proposals in a concise, easy-to-read format.
Volume two of the report presents research studies on the following topics: (1) the potential for a Pay-As-You-Earn (PAYE) withholding system to simplify and improve U.S. tax administration; (2) an assessment of how the IRS uses its Allowable Living Expense standards when determining a taxpayer’s ability to pay; (3) an analysis of how taxpayers respond to the penalty for substantial understatement of tax; (4) an analysis of the impact IRS audits have on taxpayer attitudes and perceptions, as reflected in a national survey; (5) an assessment of the IRS’s offer-in-compromise program for business taxpayers; and (6) a further analysis of the effectiveness of notices of federal tax lien and alternative IRS letters on individual tax debt resolution.
The report also contains a literature review on ways to improve IRS notices by taking into account psychological, cognitive, and behavioral science insights.
Please visit www.TaxpayerAdvocate.irs.gov/2018AnnualReport for more information.
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