Acting National Taxpayer Advocate Bridget Roberts’ recent blog post Highlights of the Taxpayer First Act and Its Impact on TAS and Taxpayer Rights discusses some of the main TFA provisions, including the impact of TFA on TAS and how many of TAS’ past recommendations have had a direct impact on the legislative changes. While many of the provisions of TFA influence tax policy and administration rather than directly impacting tax procedure, the policy and administration changes will have direct and indirect influences on the tax procedures facing taxpayers and practitioners.
The post includes useful links to some of the major TFA changes. Some of the provisions are starting to generate litigation (see, for example, what evidence the Tax Court can consider in innocent spouse cases, a topic that PT has covered already a few times –see Christine’s discussion at TFA Update: Innocent Spouse Tangles Begin.)
In this post I will highlight the key parts of the post as well as offer some brief comments on some of the challenges the IRS faces as it marches toward meeting the TFA requirement of reporting on customer service and modernization.
Highlights of NTA Post
First, the post is a reminder of how important TAS’s reports have been over the years as a contributing factor to legislative change. The Acting NTA notes that about 25 provisions within TFA were “recommended or strongly supported by the NTA or TAS.” The NTA blog post has a handy table with the TFA provisions, as well as links to underlying TAS work that relates to the TFA provisions.
Second, the post emphasizes that a few of the TFA changes directly implicate TAS, including the following:
- New rules on the next permanent NTA’s salary to limit the possibility that an NTA will face a personal financial conflict of interest when interacting with the Commissioner,
- A codification of the Taxpayer Advocate Directive (TAD) authority to make somewhat analogous the NTA’s ability to elevate systemic issues with its ability to raise individual case matters in Taxpayer Assistance Orders,
- Reducing the NTA’s annual reporting requirement on the most serious problems from 20 to 10,
- Requiring coordination with TIGTA on research studies, and
- Requiring the IRS to provide statistical support on TAS research studies, and requiring the NTA in the research reports to report in whether the IRS provided the support and determined the validity of the information.
Finally, the post praises for IRS and the way it is prioritizing implementing some of TFA’s sweeping changes, including the setting up of a dedicated “office within the IRS to oversee and coordinate the agency’s TFA implementation efforts.” While noting that the office includes the Commissioner’s Chief of Staff and executives from W&I, SBSE and IT, the Acting NTA notes one concern:
My one concern is that TAS has not been included as a core member of the TFA implementation team. Congress created the position of the NTA to serve as the statutory voice of the taxpayer within the IRS. To implement the aptly named “Taxpayer First Act,” I believe TAS should have a seat at the table to the same extent as key IRS operating divisions, particularly for purposes of implementing the TFA requirements that the IRS develop a comprehensive customer service strategy, modernize the IRS’s organizational structure, create online taxpayer accounts, and develop a comprehensive employee training strategy that includes taxpayer rights.
Concluding Brief Thoughts on TFA and Challenges the IRS Faces
In the run up to TFA and its requirement that IRS report on modernizing its structure and customer service strategy, IRS has dedicated a significant amount of time and energy around these issues. To that end see, for example the 2019 IRS Integrated Modernization Business Plan, released a few months before TFA became law this past summer. Part of the business plan had its origin in the IRS Future State initiative, as the GAO discussed in a 2018 letter with the subject Tax Administration: Status of IRS Future State Division to Senators Hatch and Wyden. That letter provides a nice historical perspective on Future State and its rebranding. Future State was a topic that inspired the recently retired NTA Nina Olson to conduct nationwide forums, which was a Special Focus in the NTA’s 2016 Annual Report to Congress.
In an era of scarce resources and rapid technological changes, tax administrators worldwide are focusing on how to efficiently deliver services. Online tools offer the promise of taxpayers able to help themselves, and minimize costly person-to-person exchanges.
Yet, one of the key themes that emerges from reading the transcripts of the 12 TAS led public forums on taxpayer needs and preferences is that there is a wide range of taxpayer resources and skills. Failing to recognize those differences when building models of service and enforcement can have an outsize impact on vulnerable taxpayers.
A Pew Research Center piece from earlier this year highlights the differing levels of access to technology across income classes, as well as the different ways that lower income individuals access the internet (see below). Simply put, lower income individuals have less access to the internet. When they do access the internet, they are often dependent on smart phones rather than tablets, laptops or desktops. The reliance on smart phones for internet access for more vulnerable taxpayers, combined with how important refundable credits are to the economic welfare of low and moderate income Americans, means that a tax system that fails to recognize the preferences and needs of these taxpayers is likely to fail to deliver quality service to many taxpayers who most need it.
This is a key challenge for those who are charged with the responsibility of ensuring that we have a 21st century tax system that delivers to all taxpayers. There is no simple way to build a world class tax system, especially one that is charged with not just collecting revenues (a herculean task in itself) but also a system that is responsible for delivering benefits that can mean the difference between living in and out of poverty.
