National Taxpayer Advocate Quotes

• “For the IRS, changes in tax laws require programming and process changes, retraining employees, and revising tax forms, instructions, and publications.  When such changes are enacted late in the calendar year, there is insufficient time before the start of the filing season to update IRS systems and to conduct the necessary taxpayer education.“ 
• “We saw the real-world impact of late-in-the-year changes during the 2007 filing season, when Congress enacted “extenders” of several tax benefits for middle class taxpayers.  It appears that more than a million taxpayers did not claim tax deductions to which they were entitled because they were not mentioned on Form 1040 or the accompanying instructions or included in shrink-wrapped software programs.“ 
• “We will have to wait to see what the impact is of the late year ‘AMT patch’ on taxpayers claiming the Child and Dependent Care Credit or other credits during the upcoming 2008 filing season.  But history tells us that many affected taxpayers will not claim these credits, despite claiming them in prior years.”

The delays in refunds caused by these late-year changes:

• “For some taxpayers, a delay of two to four weeks in receiving the refund could mean eviction, inability to pay the high heating bills that arise during winter, or defaulting on credit card bills from the holiday season.” 

The cancellation of debt income:

• “When a borrower is unable to pay a debt and the creditor cancels some or all of it, the borrower may face a significant (and perhaps surprising) tax consequence — the amount of loan cancellation is generally treated as taxable income to the debtor.” 
• “This issue received considerable attention in 2007 as homeowners defaulting on subprime mortgages were poised to receive hefty tax bills. Congress enacted legislation in December temporarily exempting most debts cancelled in connection with home foreclosures from tax, yet the fact remains that approximately two million Forms 1099 reporting COD income are issued to taxpayers annually.” 
• "Our review concluded that the IRS has done little to advise these taxpayers about various exclusion provisions, including the insolvency exception. The IRS has also declared the preparation of returns involving canceled debt issues to be “out of scope” for Taxpayer Assistance Centers (TACs).” 
• “If this issue is too complex for IRS employees (or VITA volunteers) to handle in preparing returns, how are taxpayers – especially low income taxpayers who cannot afford to pay for return preparation – going to be able to report their income correctly?”

The need for a Taxpayer Bill of Rights:

• “Although Congress, in three major pieces of legislation, has expressly identified numerous rights that are crafted to ensure a fair and just tax system and protect all taxpayers from potential IRS abuse, there is no single document that sets forth these rights in simple, clear language.”  
• “I believe taxpayers and tax administration will benefit from an explicit statement of what taxpayers have a right to expect from their government’s tax system and what the government has a right to expect from its taxpayers.” 

“Apology payments” in cases where the IRS excessively burdens or harms taxpayers:

• “The ability to monetarily compensate taxpayers when the tax system has not functioned in an appropriate manner will work to restore taxpayer confidence in that system and encourage future compliance on the part of taxpayers who may be downtrodden or discouraged by their experience.”  
• “A monetary apology to a taxpayer who has suffered emotionally and financially due to an improper handling of his or her situation may not make the taxpayer whole, but it will show the ability of the tax system to recognize and try to correct its mistakes.” 

IRS user fees:

• “User fees can hinder the IRS’s ability to achieve its mission.  For example, an officer of a tax-exempt organization asked the IRS whether an item was a “gross receipt” for purposes of determining if the organization needed to file a tax return. The IRS initially told her she would have to pay $8,700 for a ruling before it would provide an answer.”
• “Although the IRS has not studied the effect of user fees, it states that it has seen “no indication” user fees have affected taxpayer utilization of IRS services.  The IRS should study the effects that user fees are having before concluding they do not have any.” 
• “The IRS’s seemingly arbitrary reliance on user fees to pay for taxpayer services can have the appearance of ‘nickel-and-diming’ taxpayers in the short run while endangering taxpayer services in the long run.”

For audio quotes, visit the TAScast Videos page of this site.

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