2013 National Taxpayer Advocate Report

• DOI: http://doi.org/10.1002/jcaf.21912
• Published date: 01 November 2013
• Author: Caroline D. Strobel
• Date: 01 November 2013

IRS

79

© 2013 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI 10.1002/jcaf.21912

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2013 National Taxpayer Advocate Report

The Internal Revenue

Service (IRS) has been in the

news recently with reports of

political targeting of groups

and release of taxpayer’s Social

Security numbers. Nina E.

Olson has been taxpayer advo-

cate at the IRS since legislation

was passed to create that office

a number of years ago. Under

legislation to create this post,

she is tasked to report annually

to Congress on steps the IRS

needs to take in the coming

years to improve their perfor-

mance. The report expresses

particular concern about the

impact of budget cuts on the

IRS’s ability to meet taxpayer

needs, the IRS’s unwilling-

ness to issue full refunds to

victims of tax return preparer

fraud, and shortcomings in

IRS procedures for assisting

victims of tax-related identity

theft. Olson released a special

report examining the IRS’s

use of questionable criteria

to screen applicants for tax-

exempt status.

TAXPAYER ADVOCATE

SERVICES (TAS) AREAS OF

FOCUS

The report identifies the

priority issues of focus for the

upcoming fiscal year. The report

identifies particular challenges

that the IRS will face during the

coming year. Among the chal-

lenges are the following:

Relieving the financial • harm suffered by victims of

tax return preparer fraud.

Conducting adequate over-• sight of the tax return pre-

parer industry.

Providing effective, timely, • and taxpayer-centric relief

to victims of identity theft.

Utilizing effective and • timely collection alternatives

to minimize taxpayer bur-

den while reducing the num-

ber and balance amount of

overdue accounts.

Conducting education and • outreach to taxpayers about

their responsibilities under

the Affordable Care Act.

Resolving erroneous revo-• cations of the tax-exempt

status of small §501(c)(3)

organizations and failing

to provide them with a pre-

revocation administrative

appeal.

Establishing less draconian • and more reasonable “set-

tlement initiatives” for the

millions of taxpayers who

have legitimate reasons for

overseas bank and financial

accounts and whose failure

to file reports was merely

negligence.

Olson expresses particular

concern about the impact of

cuts to the IRS budget on tax-

payer services, taxpayer rights,

and revenue collection. She

notes that funding has been

cut 83 percent since FY 2010

for education and professional

training.

SPECIAL REPORT ON EXEMPT

ORGANIZATION REVIEW

CONCERNS

In addressing the exempt

organization (EO) issues, the

report does not duplicate other

investigations, but looks at the

factors that contributed to the

problems and offers 16 recom-

mendations. Olson recommends

that Congress enact a Taxpayer

Bill of Rights, which would have

covered much of the problem.

1. Lack of guidance and trans-

parency. The legal standard

“primarily” is vague and

undeveloped. Section 501(c)

(4) of the tax code provides

that an organization may

qualify for tax-exempt sta-

tus if it is “operated exclu-

sively for the promotion of

social welfare.” The regula-

tions provide that an orga-

nization meets this standard

if it is primarily engaged in

promoting in some way the

Caroline D. Strobel