24 top taxpayer problems of 2015
IRS electronic approach to customer service tops National Taxpayer Advocate's annual list
What's the biggest hassle, aside from complex tax laws, that you face in trying to do your taxes?
The National Taxpayer Advocate believes it's the Internal Revenue Service's increasing efforts to make most taxpayer interaction interactive.
National Taxpayer Advocate Nina Olson is required by law to include in her Annual Report to Congress a summary of at least 20 of the most serious problems that taxpayers face.
Given how taxpayer troubles have increased over the years, be they from inappropriate or inept IRS actions or because the agency is understaffed and underfunded, it's no surprise that in her 2015 report, Olson's list has 23 other points to join her biggest worry about the decline in personal IRS help for taxpayers.
Here's a quick look at the 24 issues that Olson believes you, I and millions of other taxpayers have or might encounter in our dealings with the IRS.
- Taxpayer service -- The IRS' comprehensive "Future State" plans -- how the agency plans to operate and interact with taxpayers in five years; most of it via electronic options -- may leave critical taxpayer needs and preferences unmet.
- IRS user fees - The IRS may adopt user fees to fees to fill funding gaps without fully considering the burden on taxpayers and the fees' impact on voluntary compliance.
- Form 1023-EZ -- This simplified form used to evaluate and grant organizations tax-exempt status makes the process virtually automatic for most applicants, which invites noncompliance, diverts tax dollars and taxpayer donations and harms organizations that later are determined to be taxable.
- Revenue protection -- Hundreds of thousands of taxpayers file legitimate tax Returns that are incorrectly flagged, meaning they experience substantial delays in receiving their refunds.
- Taxpayer access to online account system -- As the IRS develops an online account system, it may do less to address the service needs of taxpayers who wish to speak with a real, life IRS employee. This problem could be faced by folks who want more personal service, who don't have reliable (or any) Internet access or who have tax issues that aren't easily resolved via an online response system.
- Preparer access to online accounts -- Granting uncredentialed tax preparers access to an online taxpayer account system could create taxpayer security risks.
- International taxpayer service -- The closure of International Tax Attaché Offices are not accounted for in the IRS' taxpayer service strategy. Plus, the agency doesn't sufficiently address the unique needs of U.S. taxpayers abroad.
- Appeals -- The Appeals Judicial Approach and Culture Project is reducing the quality and extent of substantive administrative appeals available to taxpayers.
- Collection Appeals Program (CAP) -- The CAP provides inadequate review and insufficient protections for taxpayers facing collection actions.
- Levies on assets in retirement accounts -- Current IRS guidance on levies on retirement accounts doesn't adequately protect taxpayer rights. It also conflicts with retirement security public policy.
- Notices of federal tax lien -- The IRS files most tax lien notices based on arbitrary dollar thresholds rather than on a thorough analysis of a taxpayer's financial circumstances.
- Third-party contacts -- IRS third-party contact procedures do not follow the law and may unnecessarily damage taxpayers' businesses and reputations.
- Whistleblower program -- The IRS whistleblower program doesn't meet the needs of whistleblowers for information during the lengthy processing times. The IRS also does not sufficiently protect taxpayers' confidential information from re-disclosure by whistleblowers.
- Affordable Care Act (ACA) business concerns -- The IRS faces challenges in implementing the employer provisions of the ACA while protecting taxpayer rights and minimizing burden of compliance.
- Affordable Care Act (ACA) individual concerns -- The IRS Is compromising taxpayer rights as it continues to administer the Premium Tax Credit and Individual Shared Responsibility payments.
- Identity theft -- IRS procedures for assisting tax ID theft victims, while improved, still impose excessive burdens on taxpayers and their legitimate refunds are delayed for too long.
- Automated substitute for return program -- Current selection criteria for cases in this program create rework and impose an undue burden on affected taxpayers.
- Individual taxpayer identification numbers (ITINs) -- IRS processes create barriers to filing and paying for taxpayers who cannot obtain Social Security Numbers.
- Practitioner services -- Reductions in the Practitioner Priority Service Phone Line staffing and other services pose problems for both practitioners and the IRS.
- IRS collection effectiveness -- The IRS' failure to accurately input designated payment codes for all payments compromises its ability to evaluate which actions are most effective in generating payments.
- Exempt organizations -- The IRS' delay in updating publicly available lists of tax-exempt organizations harms the groups that are reinstated and misleads taxpayers.
- Earned Income Tax Credit (EITC) education -- The IRS doesn't do enough to educate taxpayers before filing season starts to improve EITC compliance. In addition, the IRS should establish a telephone help line dedicated to answering pre-filing questions from taxpayers about their EITC eligibility.
- EITC examination process -- The IRS is not adequately using the EITC examination process as an educational tool and is not auditing returns with the greatest indirect potential for improving EITC compliance.
- EITC and return preparer noncompliance -- The IRS' EITC return preparer strategy doesn't adequately address the role of preparers who don't comply with EITC rules.
You can read more about the taxpayer problems on Olson's latest list in The Most Serious Problems Encountered by Taxpayers section of her report.
More tax talk at Bankrate: I looked specifically at taxpayer problem #4, the increasing rate of false positive filters in wage verification screening in a post last week at Bankrate Taxes Blog.
As I noted there, the idea behind this effort to stop tax-related identity theft and refund fraud is good, but the errors mean way too many legitimate taxpayers have to wait, on average up to 18 weeks, for their tax money.
I usually post my additional Bankrate tax thoughts at that website on Tuesday and Thursday. If you miss the posts then and there, you usually can find highlights of those posts and links to them here at the ol' blog the following weekend.