National Taxpayer Advocate Reminds Congress of IRS Deficiencies

By and on April 18, 2018

On April 17, 2018, the Taxpayer Advocate, Nina E. Olson, testified before a Congressional Oversight Committee regarding on-going challenges to the administration of an efficient and effective tax system. Ms. Olson runs the Taxpayer Advocate Service (TAS), an independent office within the Internal Revenue Service (IRS). The Taxpayer Advocate is appointed by and reports directly to the Commissioner of Internal Revenue. The office was created under the Taxpayer Bill of Rights, which became law on July 30, 1996. The office replaced the IRS Office of the Ombudsman.

In her testimony, Ms. Olson reviewed the substantial issues facing the IRS. The main issues she commented on include:

  1. Since 2010, the IRS has lost approximately 20 percent of its funding and personnel. These reductions have led to systematic cuts to the service level and have prevented the IRS from deploying new technology and improving the efficient and effective administration of the tax law.
  2. The comprehensive tax reform that occurred in December of 2017 further challenges the IRS’s ability to provide consistent service to taxpayers as the IRS attempts to provide timely resources.
  3. The IRS’s electronic and online infrastructure is seriously lacking and leading to deficits: “The IRS must also upgrade the technology available for taxpayers using its online resources.” For example, of the 1.8 million online account registration attempts, only 15 percent were successful because of aging and failing technology.
  4. Fraud detection continues to be a serious problem for the IRS. IRS filters returns to try to detect thieves using the IRS’s systems to steal money from the fisc. Unfortunately the tools at the IRS’s disposal are inadequate and last year had a false-positive rate of 60 percent! Similar issues exist with taxpayer identity theft.

Practice Point: Ms. Olson’s testimony echoes many tax professionals’ concerns that our tax system is not being implemented in the most effective and efficient manner. Although TAS’s perspective focuses on the “customer service” experience, the frustrations identified are systematic. With the advent of tax reform and the government’s struggle to implement its sweeping changes, we are hopeful that many of these issues will be addressed and perhaps rectified. After all, hope springs eternal!

Kevin Spencer
Kevin Spencer focuses his practice on tax controversy issues. Kevin represents clients in complicated tax disputes in court and before the Internal Revenue Service (IRS) at the IRS Appeals and Examination divisions. In addition to his tax controversy practice, Kevin has broad experience advising clients on various tax issues, including tax accounting, employment and reasonable compensation, civil and criminal tax penalties, IRS procedures, reportable transactions and tax shelters, renewable energy, state and local tax, and private client matters. After earning his Master of Tax degree, Kevin had the privilege to clerk for the Honorable Robert P. Ruwe on the US Tax Court. Read Kevin Spencer's full bio.

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