Taxpayer Rights: Measuring IRS Performance

22 Flares Filament.io 22 Flares ×

There is a lot to digest in the 2016 National Taxpayer Advocate Annual Report that was released earlier this month. One of the new parts of the 2016 report was the creation of a taxpayer rights assessment, which reviews IRS performance measures and data organized around the ten taxpayer rights embedded in the Taxpayer Bill of Rights. The general idea is to further cement the notions of taxpayer rights into the calculus of good tax administration.

read more...

As the report discusses, this is a work in progress, both in identifying what are the appropriate ways to illustrate IRS performance relating to taxpayer rights and in ensuring that IRS or an outside group can observe and report on those tasks.

The initial assessment compares and reports on FY 2015 and 2016 metrics, including the following:

  • percentage of phone calls to IRS answered,
  • the no change, agreed and non response rate for correspondence, field and office exams,
  • the numbers of e-filed and paper filed returns by preparers and taxpayers directly,
  • numbers of returns submitted through the Free File consortium, by VITA and other volunteer groups,
  • the average days needed to resolve EITC and other correspondence examinations,
  • the numbers of submitted and accepted collection alternatives like offers and installment agreements,
  • and the number of tax clinics and volunteers hours at those clinics.

There are lots of items identified where there was no data available, such as numbers of math error adjustments that were abated, the percentage of taxpayers who felt their issues were resolved after contacting IRS by phone, and satisfaction relating to a variety of Appeals functions.

A taxpayer rights assessment is a great idea. One of the common critiques of taxpayer rights provisions is that in some cases an agency that violates a taxpayer’s rights may not lead to the taxpayer enjoying a specific remedy. No doubt when Congress wants to get an agency’s attention it can be specific in providing a consequence, such as monetary damages or a shift in the burden of proof if a dispute finds its way in court.

Yet the absence of a remedy does not mean that there are no other ways to encourage good agency practice. My research in the ways that agencies interact with regulated parties outside the tax system suggests that softer notions like employee training and mission statements that specifically address aspirational conduct and respect for the rights of those who are regulated can have an impact on rights that agencies should aspire to protect. In addition, transparency surrounding agency performance can influence agency conduct. An annual taxpayer rights assessment has the potential for  encouraging the IRS to do the right thing in the absence of a specific statutory consequence for failing to do so.

I am working on a paper discussing the role of taxpayer rights and compliance. Part of my paper focuses on how IRS metrics on its audits justifiably key in on revenue protected and on important metrics like the percentage of taxpayers who fail to respond to IRS correspondence audits and agree with IRS proposed adjustments. Absent from the equation has been the percentage of taxpayers who following an adjustment understand why in fact their return as filed was incorrect or whether the taxpayer felt that she had a fair shake in presenting information to justify a tax return position or explain why the taxpayer may have taken a position on a return.

To be sure, measuring taxpayer reaction is costly, and IRS has lots on its plate. It seems to me that good administration includes trying to assess more methodically how IRS is doing around the rights that are reflected in the 2014 Taxpayer Bill of Rights. I look forward to this hopefully becoming a regular part of the annual reports and more importantly it becoming inculcated in how IRS thinks it is doing in administering the tax laws.

For our prior post on the 2016 Report generally as well as links to the different volumes of the Report see NTA Releases Annual Report.

Sidebar: Taxpayer Rights Conference

The Institute for Austrian and International Tax Law at WU (Vienna University of Economics and Business) is hosting the second international taxpayer rights conference in Vienna on March 13 and 14. The conference is convened by the National Taxpayer Advocate and is sponsored in part by Tax Analysts. The conference promises to bring together an eclectic group of scholars and tax administrators. Details on the conference can be found here.

Leslie Book About Leslie Book

Professor Book is a Professor of Law at the Villanova University Charles Widger School of Law.

Comments

  1. Bob Kamman says:

    Coincidence?
    1) George Orwell’s “1984″ rises to top of Amazon Best Seller list.
    2) California CPA James Counts keeps practitioners informed through his TaxTalkNews Yahoogroups email list. I just received this from him:
    At a meeting Thursday with the IRS we were provided some updated information on the request for driver license information when efiling a tax return.
    First of all the driver license information requested is the state that issue the driver license, the driver license number, the date issues and the date expired.
    This year something needs to be provided on the efiled returns. So if the taxpayer and or spouse does not have a driver license or state identification card then a box or code (depending on how the software vendor programed this item) will be entered saying the taxpayer does not have a driver license or state identification card.
    The problem here is maybe the taxpayer or spouse DOES HAVE a driver license or state identification card BUT does not wish to provide the information. What does the taxpayer or tax preparer do then?
    The IRS wants the taxpayer or taxpayer representative to check the box or enter the code that the taxpayer or spouse DOES NOT have a driver license or state identification card.
    So the taxpayer or tax practitioner must enter something. Either the information or something showing they are stating they have not driver license or state identification card.
    From this view the IRS will REQUIRE something to be provided for ALL tax returns to be efiled and if nothing is provided the return will be rejected. The saying the taxpayer or spouse does not have a driver license or state identification card even if they do have one or the other will meet the requirement for providing something expect for the two states mentioned. It is my understanding ONLY two states will REQUIRE driver license information if the taxpayer or spouse have a driver license or state identification number. Alabama and New York.
    So the issue is if a taxpayer or spouse has a driver license or state identification number and they do not wish to provide that information or have it in the efiled return what is the issue for tax preparers?
    We have an obligation to provide correct information and correct answers to questions. By checking the box or entering a code that says the taxpayer and or spouse does not have a driver license or state identification card then in effect we are knownly falsely answering a question on the tax return.
    Per the discussion with the IRS it appears (yes they can change their mind) they WILL NOT change either this requirement or change the schema to allow for a code saying taxpayer or spouse does have a driver license or identification card but does not wish to provide that information.
    So what is the tax preparer to do in these circumstances? Their options are:
    1. Get the taxpayer to spouse to provide the information and authorize you to enter the information, or
    2. Answer the question when the taxpayer or spouse says they do not wish to provide the information with the check the box or enter the code saying they do not have a driver license or state identification card even though you know you are not telling the truth when answering the question, or
    3. Do not efile the return but file by paper.
    During our meeting with the IRS all the practitioners representatives felt this was a huge issue for all practitioners.
    Does this open the door for practitioners to answer questions falsely when clients do not wish to provide the correct information? Likely it will be argued no but given this case when will this ability to answer wrongly stop as it is the taxpayer wishing to answer the question falsely? Also some tax practitioners may decide to not seek this information from their client(s) due to the extra workload on the tax practitioner so on the tax practitioner’s own decision to falsely answer the question will this be going too far in being able to falsely answer a question so now the tax practitioner doing this could lose their ability to practice?
    Each tax practitioner will have to decide what they will do for themselves as the IRS does not put out guidance on the data elements so saying it is ok to falsely answer a question is very unlikely to be issued in any context by the IRS

    • Carl Smith says:

      Bob,

      It is distressing to hear that NY will insist on the drivers license number, since NY law allows for suspending dirvers licenses where there are significant New York State tax debts owed.

Comment Policy: While we all have years of experience as practitioners and attorneys, and while Keith and Les have taught for many years, we think our work is better when we generate input from others. That is one of the reasons we solicit guest posts (and also because of the time it takes to write what we think are high quality posts). Involvement from others makes our site better. That is why we have kept our site open to comments.

If you want to make a public comment, you must identify yourself (using your first and last name) and register by including your email. If you do not, we will remove your comment. In a comment, if you disagree with or intend to criticize someone (such as the poster, another commenter, a party or counsel in a case), you must do so in a respectful manner. We reserve the right to delete comments. If your comment is obnoxious, mean-spirited or violates our sense of decency we will remove the comment. While you have the right to say what you want, you do not have the right to say what you want on our blog.

Speak Your Mind

*