Nina Olson's Views and Recommendations: The Taxpayer Advocate's 2011 Report

At the end of 2011, National Taxpayer Advocate Nina E. Olson delivered her Annual Report to Congress. She included a historical discussion of the U.S. Federal income tax system. She also discussed the most serious issues encountered by taxpayers in the U.S. and she provided a status update regarding previously identified issues. Ms. Olsen went on to make legislative recommendations and also highlight the most litigated tax issues of 2011.

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Although the workload of the IRS has increased due to the complexity and new provisions, its budget has been cut in the past two years. Accordingly, the effectiveness of the agency has declined. This will lead to problems like those preceding the IRS Restructuring and Reform Act of 1998. TPA Olson calls for (as she did in the previous report) a Taxpayer Bill of Rights. She implores Congress to fund the IRS appropriately.

[2] Most Serious Problems Encountered by Taxpayers

  • The IRS is Not Adequately Funded to Serve Taxpayers and Collect Taxes...
  • The IRS's Wage and Withholding Verification Procedures May Encroach on Taxpayer Rights and Delay Refund Processing...
  • Tax Related Identity Theft Continues to Impose Significant Burdens on Taxpayers and the IRS...
  • Expansion of Math Error Authority and Lack of Notice Clarity Create Unnecessary Burden and Jeopardize Taxpayer Rights...
  • Automated 'Enforcement Assessments' Gone Wild: IRS Efforts to Address the Non-Filer Population Have Produced Questionable Business Results for the IRS, While Creating Serious Burdens for Many Taxpayers...
  • Changes to IRS Lien Filing Practices are Needed to Improve Future Compliance, Increase Revenue Production, and Minimize Economic Harm Inflicted on Financially Struggling Taxpayers...

[3] International Issues

  • Compliance Challenges Increase International Taxpayers' Need for IRS Services and May Undermine the Effectiveness of IRS Enforcement Initiatives in the International Arena...
  • Foreign Taxpayers Face Challenges in Fulfilling U.S. Tax Obligations...
  • Individual U.S. Taxpayers Working, Living, or Doing Business Abroad Require Expanded Service Targeting Their Specific Needs and Preferences...
  • Small Businesses Involved in International Economic Activity Need Targeted IRS Assistance...
  • Globalization Requires Greater Internal IRS Coordination of International Taxpayer Service...
  • U.S. Taxpayers Abroad Face Challenges in Understanding How the IRS Will Apply Penalties to Taxpayers Who are Reasonably Trying to Comply or Return into Compliance...
  • The IRS's Offshore Voluntary Disclosure Program "Bait and Switch" May Undermine Trust for the IRS and Future Compliance Programs...

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[5] Compliance Issues

  • The IRS Does Not Emphasize the Importance of Personal Taxpayer Contact as an Effective Tax Collection Too...
  • The New Income Filter for the Federal Payment Levy Program Does Not Fully Protect Low Income Taxpayers from Levies on Social Security Benefits...
  • The IRS Has Failed to Stem the Tide of Transfers to Its Excess Collection File, Which Contains Billions of Dollars in Payments, and Makes Disproportionately Little Effort to Prevent Transfers from Low Income Taxpayers...

[6] Tax Administration Issues

  • The IRS's Failure to Consistently Vet and Disclose Its Procedures Harms Taxpayers, Deprives It of Valuable Comments, and Violates the Law...
  • After Refund Anticipation Loans: Taxpayers Require Improved Education About Refund Delivery Options and the Availability of a Government-Sponsored Debit Card...
  • The IRS Procedures for Replacing Direct Deposit Refunds are Not Adequate...

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[8] Legislative Recommendations

As required, the TPA has included in her report certain recommendations to Congress. This section of her report is available at: http://www.irs.gov/pub/irs-utl/2011_arc_legrecommendations.pdf...

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LEXIS users can access the complete commentary HERE. Additional fees may apply. (Approx. 12 pages)

RELATED LINKS: For more information regarding the duties and responsibilities of the National Taxpayer Advocate, see:

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