Taxpayer Advocate Service News
  1. NTA Blog: LITC Program Office’s Latest Report Details Tireless Work of Those Giving Voice to the Voiceless

    Subscribe to the NTA’s Blog and receive updates on the latest blog posts from National Taxpayer Advocate Nina E. Olson. Additional blogs from the National Taxpayer Advocate can be found at www.taxpayeradvocate.irs.gov/blog.

    This week, 219 people from 134 Low Income Taxpayer Clinics (LITCs) are gathering in Washington, D.C., to attend the annual training conference of LITC grant award recipients.  Before becoming the National Taxpayer Advocate, I was the founder, director, and attorney of the first independent LITC in the country, so I care deeply about this program. At the clinic, I represented taxpayers who had problems with the IRS, and I saw first-hand the challenges that await taxpayers in IRS disputes. Along with the late Janet Spragens of American University Washington College of Law, during hearings associated with IRS reorganization, I advocated for allocating federal grant funds to LITCs and for creating a permanent LITC program, which was codified as IRC § 7526.

    Congress recognized the need of taxpayers who are low income or who speak English as a second language (ESL) to have representation in disputes before the IRS and since 1999, it has appropriated funds annually to provide matching grants to organizations that develop, expand, or continue an LITC). Although LITCs receive partial funding from the IRS, clinics, their employees, and their volunteers are completely independent of the IRS. 

    The LITC Program is a matching federal grant program that provides up to $100,000 per year to organizations that represent low income taxpayers in controversies with the IRS and provide education and outreach to ESL taxpayers. LITC services are free or low cost for eligible taxpayers. LITCs bring together the skills of their employees, students, and volunteers to safeguard taxpayer rights both in individual cases and systemically.

    Today, the Taxpayer Advocate Service (TAS) administers the LITC Program. Each year, in December, the TAS LITC Program Office issues a LITC Program Report, Publication 5066 that provides an overview of the LITC Program, discusses challenges of the people that need assistance from an LITC, and highlights some of the Program’s accomplishments over the past year. The report describes the LITC program growth during fiscal year (FY) 2017; provides information about LITCs successes in protecting taxpayers’ access to justice through representation, education and advocacy; explains how LITC funds are spent; and lists all active LITCs as of December 2018. In this blog post, I would like to provide some highlights from the report.

    Background

    In 2017, the Low Income Taxpayer Clinic (LITC) Program awarded approximately $11.8 million in grants to 138 organizations across the United States, including seven that received an award for the first time. Full year reports on the accomplishments of 2017 won’t be available until 2018, so this year’s Program Report details the work done in 2016.

    As I described above, the maximum LITC grant is $100,000 per year, and many of our recipients receive much smaller sums. However, despite the modest size of the grants, each clinic maintains a staff that includes an attorney, certified public accountant (CPA), or enrolled agent who can represent taxpayers before the IRS. In addition, LITCs must have a staff member or a pro bono panel member who is admitted to practice before the United States Tax Court to handle litigation matters. Students and recent law graduates working at an LITC may be authorized to represent taxpayers before the IRS, under supervision of appropriate tax professionals and professors. Moreover, LITCs are supported by the work of many volunteers. Over 1,800 volunteers provided 47,480 hours to LITCs in 2016. More than two-thirds of the volunteers were attorneys, CPAs, or enrolled agents. 

    Representation in Tax Controversies

    For a low income individual or family, or for those living in a state of financial hardship, the potential monetary impact of a tax controversy, such as when the IRS denies a claim for a refund attributable to the Earned Income Tax Credit or a Child Tax Credit, or imposes a penalty for failing to follow the requirements of the Affordable Care Act, can be devastating. Achieving a correct outcome in a controversy with the IRS should not depend on the taxpayer’s ability to pay for representation. Thus, representation services provided by LITC for free or a nominal fee are very important for the taxpayers’ rights to representation, to pay no more than the correct amount of tax, and to fair and just tax system. In 2016, LITCs represented 19,479 taxpayers dealing with an IRS tax controversy.  Refund cases represented eight percent of the overall caseload worked in 2016, and LITCs succeeded in securing over $4.3 million dollars in cash refunds for low income taxpayers.   

    Choosing the appropriate avenue for seeking relief and communicating with the IRS can be overwhelming for an unsophisticated taxpayer who cannot pay the amount shown on an IRS notice or may not even be able to understand what the notice says. More than half of the taxpayer cases worked in 2016 involved collection matters. The combined efforts of clinic staff and volunteers provided relief to over 4,200 taxpayers facing an IRS collection action and allowed these taxpayers to become tax compliant. The figure below shows the allocation of LITC assistance to taxpayers by issue.

       

    Example: During 2016, an LITC represented a single father and helped him to obtain years of tax credits the IRS had improperly denied him. The taxpayer’s former wife was deceased, and although no one else had claimed any credits for his son, the IRS audited his claims for a dependency credit, Child Tax Credit (CTC), and Earned Income Tax Credit (EITC). The taxpayer was not fluent in English, and had difficulty explaining his circumstances to the IRS. During the examination, the taxpayer moved over 1,000 miles away. He asked the IRS to transfer his case to a closer office. The IRS refused. A relative drove the taxpayer more than 1,000 miles back to speak with the examiner. The relative was more skilled in English and was hoping to help the taxpayer explain the situation to the examiner. Because the taxpayer did not have an appointment, the examiner refused to speak with the taxpayer. The IRS denied the credits, assessed a liability of over $17,000, and placed a ban on the taxpayer’s account that prohibited him from claiming the EITC for an additional two years, finding that the taxpayer had acted with reckless disregard in making his EITC claim. The LITC requested the IRS conduct an audit reconsideration of the taxpayer’s case. After 18 months without an IRS response to the request, the LITC requested TAS assistance. TAS assisted the LITC in resolving one year. Because the IRS had by now disallowed dependency exemptions and credits for two subsequent years, the LITC filed a petition with the U.S. Tax Court. Ultimately, the LITC persuaded the IRS to reverse its position, eliminate the liability, refund approximately $13,000 to the taxpayer, and remove the EITC ban. This taxpayer’s perseverance along with the LITC’s dedication to obtaining justice ultimately secured the right to pay no more than the correct amount of tax for this taxpayer.

    Education and Outreach Activities

    In addition to representing low income taxpayers in controversies with the IRS, LITCs are required to provide outreach and education about taxpayer rights and responsibilities to ESL taxpayers. Taxpayers living in the United States and for whom English is a second language (ESL) may face barriers to finding reliable tax information about their rights and responsibilities as taxpayers. ESL taxpayers who immigrate to the United States may come from countries where the tax systems operate in a much different fashion, and those arriving from countries with pervasive corruption may bring with them a mistrust of government institutions. They may be completely unfamiliar with the process of filing a tax return or even maintaining a bank account. When seeking to comply with the tax laws, they are exposed to risks like identity theft from unscrupulous tax return preparers who may steal or divert refunds and disappear long before their acts are discovered. Empowering taxpayers to exercise their rights begins with helping them to understand those rights. LITCs held more than 2,500 events in 2016 that provided free, reliable, and accurate tax education to a combined audience of over 70,000.

    Advocacy

    The third prong of the LITC mission is to identify and advocate for issues that impact low income and ESL taxpayers. LITCs may achieve this goal through a variety of methods, including but not limited to:

    • Participating in advocacy projects with professional organizations;
    • Commenting on proposed IRS regulations and guidance;
    • Preparing and filing an amicus brief to alert a court about the concerns of low income or ESL taxpayers;
    • Authoring articles in scholarly journals or general interest publications;
    • Appearing on television or radio to raise awareness about tax issues that affect low income or ESL taxpayers;
    • Producing public service announcements; or
    • Submitting issues to the Systemic Advocacy Management System (SAMS), available through the IRS website at www.irs.gov/Advocate/Systemic-Advocacy-Management-System-SAMS.

    In yet another example of a successful LITC advocacy, the clinic made it easier for a full-time MBA student to deduct the cost of his graduate education. The taxpayer came to an LITC for assistance after the IRS denied deductions he claimed as unreimbursed employee expenses for obtaining an Executive Masters Business Administration (EMBA) graduate degree. The IRS argued that obtaining the EMBA degree qualified the taxpayer for a new trade or business, and the degree was unrelated to an ongoing trade or business, since his employer terminated his employment while pursuing his degree. The LITC represented the taxpayer and persuaded the Tax Court that he continued to perform essentially the same tasks after obtaining the EMBA, although the knowledge he obtained through his studies allowed him to address more complex issues. The LITC also proved that the EMBA did not qualify him for a new trade or business, and temporary unemployment while pursuing the EMBA did not render the educational expenses nondeductible. 

    The nationwide network of LITCs provide important services and face-to-face assistance to low income taxpayers in local communities.  

       

    The program’s success led Congress to appropriate $12 million for 2017 awards, a six-fold increase from the amount Congress appropriated in 1999. I encourage you to read the full LITC program report and visit the LITC webpage on the TAS website to learn more about the important work of these tireless, unsung heroes.

    The views expressed in this blog are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate is appointed by the Secretary of the Treasury and reports to the Commissioner of Internal Revenue. However, the National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget.

  2. NTA Blog: Taxpayer Assistance Center Service Continues to Decline, Impairing Taxpayers’ Ability to Receive In-Person Assistance

    Subscribe to the NTA’s Blog and receive updates on the latest blog posts from National Taxpayer Advocate Nina E. Olson. Additional blogs from the National Taxpayer Advocate can be found at www.taxpayeradvocate.irs.gov/blog.

    The other day, I came across an interesting item in the news, describing that for the first time in its history, Macy’s was only letting people with appointments visit its famous Santa. I was interested in this because, for all intents and purposes, the Internal Revenue Service (IRS) had been “appointment only” in its Taxpayer Assistance Centers (TACs) since November 2016. So on the face of it, the IRS was in the vanguard of customer service.

    Of course, it is silly to equate the IRS with Macy’s department store. Tax compliance, which is the IRS’s business, is about as far from the retail business as one can get. Yet both are (or should be) concerned about customer service, and the IRS may be able to learn some lessons from Macy’s. Macy’s decision to go appointment-only for Santa is obviously driven by the desire to reduce the irritation of potential customers standing in line for hours and becoming irritable, which would negatively impact the amount of time for and enjoyment of spending money on store purchases. Macy’s lets people schedule online up to 30 minutes in advance. So Macy’s isn’t trying to keep people away from its Santa – it wants people to come see Santa and go into its store and shop.

    But what could be the IRS’s rationale for moving to appointment-only in the TACs? Well, certainly there is concern that taxpayers might travel a great distance and show up at a TAC only to find a long line and be turned away. From this perspective, it would be a kindness to let the taxpayer call in advance and make an appointment. And the folks who answer the TAC appointment line calls can often resolve the taxpayer’s issue over the phone, saving the taxpayer a trip.

    Giving taxpayers specific appointment times, resolving issues over the phone, and saving taxpayers unnecessary trips are all positive things. But none of those benefits explain why the IRS should mandate appointments in the TACs. Unlike Macy’s, taxpayers cannot call up the IRS and get an appointment within 30 minutes. (On some days, taxpayers are lucky to be put on hold with the IRS for only 30 minutes.) And unlike Macy’s, the IRS is actively trying to discourage taxpayers from coming into its TAC “store” by systematically reducing the “products” and services it offers there.

    In fact, for many years I have detailed my concerns about IRS face-to-face service in general, and more specifically the services provided (or not provided) by the TACs. I have offered numerous recommendations to the IRS on how to improve person-to-person service, including innovative ways to reach taxpayers in need where they are, rather than making taxpayers come to the IRS. Nonetheless, the IRS has continued to make cuts to services provided at TACs, culminating with switching to an appointment-only system for visiting what used to be colloquially known as “walk-in” sites.  

    I have heard concerns from practitioners, taxpayers, and the network of TAS Local Taxpayer Advocates (LTAs), several of which I will share in today’s blog. At the Southeastern Regional Bar Liaison’s meeting, I heard from several practitioners regarding the service shortcomings at TACs. While the IRS has told TAS that appointments are not necessary for routine tasks like filing a return, making a payment, or picking up forms, based on the stories I have heard, this message from headquarters may not be reaching the field.  

    One attorney at the meeting relayed to me that he had visited a TAC to make a multi-million-dollar payment to the IRS on behalf of his client. The TAC refused to accept the check, which his client wanted hand-delivered for security reasons. The client and the practitioner were baffled that the IRS would turn away money. Of the attorneys at the meeting, one-quarter indicated that they had been turned away from TACs since January 2017, when trying to make a payment. The IRS is the tax collector!  How can it ever justify not accepting a check?

    More recently, the IRS issued an alert to employees further clarifying what taxpayers can do at TACs without an appointment and modifying the appointment system.  Customer Service Representatives will no longer schedule same day appointments for TAC service (much less 30 minutes in advance, like Macy’s). Previously, if a taxpayer arrived at a TAC without an appointment, found the TAC was empty of customers, and the manager would not use discretion to help the taxpayer, the taxpayer could step outside, call for an appointment and possibly receive assistance shortly thereafter if an appointment showed as available. Now, that same taxpayer must make the phone call and come back another day. The failure to use existing resources efficiently is concerning, both from compliance and taxpayer rights standpoints. Turning a taxpayer away for not having an appointment when TAC employees have no other appointments scheduled makes no sense and confuses, frustrates, and upsets taxpayers. And since we aren’t talking about department stores here, but rather tax compliance, taxpayer confusion, frustration, and unhappiness translates very easily into tax noncompliance.  This is not a good business model.

    Wherever a TAS office is co-located with a TAC, TAS employees assist taxpayers turned away from the TACs but only if a TAC employee or a building security guard kindly points the taxpayer to TAS. One LTA has been keeping a detailed log of the times the TAS office assists taxpayers who could not get help at the TAC. In one egregious example, a taxpayer drove nearly 100 miles to get assistance at the TAC and was turned away; the TAC manager would not make an exception to assist the taxpayer despite the hardship that repeating the drive would create for the taxpayer. TAS stepped in to assist the taxpayer and resolve his issue. In another example, a taxpayer who was a victim of identity theft attempted to make a payment at the TAC, only to find the TAC closed. The IRS website had not been updated timely to reflect the closure. Because the taxpayer only had Internet access via his phone, making a payment online was not practical and the taxpayer had grave concerns about security due to being a victim of identity theft. TAS assisted the taxpayer in making the payment.

    Now, I recognize the concerns the IRS has with budget constraints, and I also acknowledge that brick and mortar locations are expensive. I’m sensitive to the IRS’s understandable desire to nudge taxpayers toward less expensive service channels. But many taxpayers continue to want to have their tax issues resolved face-to-face, and situations will continue to exist where this type of customer service is the most appropriate way to resolve an issue for that taxpayer. But, when the IRS hangs the sign depicted below up at all TACs, what message is it sending to taxpayers?
     
      

    This sign certainly doesn’t look like a nudge to me – it looks more like a door shut in your face. How much more reassuring would it be to post a sign that reads, “Appointments Recommended, But Walk-ins Welcome”? If people walk in, you can still serve them while educating them on the benefits of making an appointment in advance. And we should never lose sight of the fact that the IRS’s job is to help taxpayers comply with their tax obligations. People don’t come to TACs to see Santa; they come to get help with meeting their responsibilities as taxpayers. Why ever would we turn them away?

    You can read more about my concerns about TAC service and the closures of TACs in the upcoming National Taxpayer Advocate 2017 Annual Report to Congress, which will be released in early January.

    The views expressed in this blog are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate is appointed by the Secretary of the Treasury and reports to the Commissioner of Internal Revenue. However, the National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget.

  3. NTA Blog: Thanksgiving wishes from the National Taxpayer Advocate

    Subscribe to the NTA’s Blog and receive updates on the latest blog posts from National Taxpayer Advocate Nina E. Olson. Additional blogs from the National Taxpayer Advocate can be found at www.taxpayeradvocate.irs.gov/blog.


    As we all pause to give thanks at the beginning of this holiday season, I’d like to share with you a few things for which I am grateful.

    I am thankful to live in a country whose government and citizens support the extraordinary work of the Taxpayer Advocate Service and for its dedicated employees who tirelessly advocate day in and day out to help taxpayers resolve their tax issues. I also am thankful for the dedicated work of IRS employees, whose compassion, along with those of the TAS employees, was demonstrated so strongly just recently in their efforts to assist victims of the recent disasters.  And I am thankful to you, the readers of this blog, who care about Taxpayer Rights as much as I do.

    May your Thanksgiving holiday be a happy and peaceful one.  We’ll be back next week with our regular blog.

    Nina E. Olson, National Taxpayer Advocate

    The views expressed in this blog are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate is appointed by the Secretary of the Treasury and reports to the Commissioner of Internal Revenue. However, the National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget.

  4. The 2017 IRS Nationwide Tax Forums a success for TAS

    Each year, the IRS sponsors the Nationwide Tax Forums, a three-day series of tax education and networking conferences for tax professionals in cities around the country.

    The 2017 Tax Forums featured the latest information from the IRS, news about tax law changes, a chance to meet with software vendors, and the opportunity to attend seminars presented by IRS and TAS employees in addition to members of professional associations.
     
    TAS offered three seminars, oversaw the Case Resolution Program and held two focus groups. The TAS seminars received positive comments from many of the participants. TAS seminar topics included:

    • Advocating for Your Client whose Accounts were Assigned by the IRS to a Private Collection Agency (PCA). This presentation discussed the statutory basis and the IRS’s implementation of the private debt collection initiative in 2017. It covered the program and how to protect and advocate for your clients if they have been referred to an agency and protecting your client’s taxpayer rights in dealing with the agencies.

    • Advocating for Your Client in Cases Involving Trade and Business Expenses – Hobby Losses. This presentation started with a general overview of trade and business expenses with a specific focus on hobby losses. Recently decided court cases involving hobby losses and other trade and business expenses will be explored for strategies for advocating on behalf of your clients to the IRS. It discussed several best practices for substantiating those expenses.

    • Advocating for Your Client in Issues Flowing from the Foreign Account Tax Compliance Act (FATCA) This presentation discussed the overview of the legal and administrative background regarding FATCA, including withholding of fixed, determinable, annual, and periodic (FDAP) payments to nonresidents. It covered the process of obtaining applicable refunds and how to advocate for your client who is experiencing delays or other difficulties in these efforts. The National Taxpayer Advocate 2016’s Annual Report to Congress addresses this problem facing taxpayers. If you missed this seminar, you can still take this seminar for credit; visit the IRS Tax Forum Online.

    Case Resolution Program

    This year practitioners brought their toughest unresolved IRS case (one case per tax business) to the Case Resolution Program (CRP). IRS and TAS representatives with specialized expertise were available to meet with the practitioners one-on-one to discuss their case. Nearly 900 cases were worked at the tax forums, with a 99% resolution rate.

    “I just used Case resolution program to resolve a problem I had been trying to resolve for over 10 months, she got it done in 20 minutes,” stated one practitioner.

    Please make plans to join us next year and bring your toughest case. Start looking for information in the Spring. Remember, you must present a signed original or copy of your Power of Attorney to schedule the appointment.

    Focus Groups

    TAS hosted two focus groups this year at all five locations and practitioners were eager to give TAS their views. The topics were Installment Agreements and Experiences with TAS Services. The National Taxpayer Advocate is very interested in the practitioner’s opinions on these topics and how TAS can advocate for taxpayers in this changing environment.


    Look for your opportunity to sign up for the 2018 Tax Forums this Spring. We look forward to seeing you.

  5. Success Story: TAS Advocates for Release of Levy due to Hardship

    Every year the Taxpayer Advocate Service (TAS) helps thousands of people with tax problems. This story is only one of many examples of how TAS helps resolve taxpayer issues. All personal details are removed to protect the privacy of the taxpayer.

    TAS received an inquiry from a local congressional office for a taxpayer whose bank account had been levied by the IRS after substitute tax returns had been filed on her behalf by the IRS. The taxpayer had received insurance money deposited into her account to repair her roof. The IRS levied her bank account, taking the money she desperately needed to repair her roof. Because of the hardship and the taxpayer’s current financial status, a TAS case advocate was able to request the IRS return the money so the taxpayer could get her roof repaired. After relieving the immediate hardship for the taxpayer, TAS assisted her with filing corrected returns, resulting in the reverse of the substitute tax assessments and a refund. 

    When working with the Taxpayer Advocate Service, each individual or business taxpayer is assigned to an advocate who listens to the problem and helps the taxpayer understand what needs to be done to resolve their tax issue. TAS advocates will do everything they can to help taxpayers and work with them every step of the way. Occasionally TAS features stories of taxpayers and advocates who work together to resolve complex tax issues. Read more TAS success stories.

    Learn about TAS eligibility.