Join the Annual PT Giving Tuesday Drive

It’s that time of year for the annual Procedurally Taxing tradition (among other traditions such as April Fool’s, Taxatturkeys, etc.) in which we provide an update on the Center for Taxpayer Rights’ activities over the last year and ask that you support the Center’s work.  We know that PT readers are being bombarded with charitable solicitations for very worthy causes, but the Center’s work is directly on point for PT’s focus on procedural due process and taxpayer rights.  We hope you’ll read on to learn about the things we’ve been able to accomplish given folks’ past support of the Center and the exciting things planned for 2022  And of course, we hope all this will motivate you to donate to the Center this year.

As I’ve discussed here and here and here, 2021 brought renewed focus on the role of the tax system in administering social benefits.  The Center was privileged to receive a grant from the Rockefeller Foundation to explore this topic.  As a result, we held an online workshop series this fall titled Reimaging Tax Administration: Social Programs through the Tax Code.  We’ve posted most of the workshop videos on our Youtube channel (you all should subscribe!); you can access the videos and materials from the workshop series on our website here.  In 2022 we will publish our report and recommendations for running social programs through the tax code.

The second part of the Rockefeller grant is to conduct a survey of state and local tax procedure and taxpayer rights, especially as they impact low income and unrepresented taxpayers.  We will be partnering with volunteers from the American Bar Association (ABA) Tax Section’s State and Local Tax Committee and Low Income Tax Clinics (LITCs), as well as others, to complete the survey.  This will be a comprehensive review of taxpayer protections in the context of state (and local) tax administration, including income, employment, property, and other taxes.  From this, we plan to identify best practices as well as harmful consequences of existing practices, and propose model legislation for state funding of LITCs for representation in state-level tax disputes and establishment of state taxpayer advocate offices.

The Rockefeller grant also enabled us to retain Anna Gooch as a research fellow for both projects, and she has worked tirelessly on developing the state survey, consulting with experts, incorporating advice and comments, and basically bringing it to fruition.  The really good news is that Anna has been awarded the American Bar Association Tax Section’s Christine A. Brunswick Public Service Fellowship for 2022 to 2024, so we will have Anna with us for at least three years.  Yay!!  (Anna will be posting on PT soon; see her earlier post here.)

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As a client of the Tax Clinic at the Legal Services Center of Harvard Law School, we filed amicus briefs in two cases on certiorari to the United States Supreme Court.  CIC Services was decided along the lines we briefed, and we are hopeful that Boechler will be as well.  Les has discussed CIC Services here and here, and Keith has discussed the Boechler briefs here.  This is all part of a broader movement to get LITCs to file amicus briefs in cases that impact low income and other pro se taxpayers, even when the cases involve well-off or corporate taxpayers.

Here are a few other things the Center accomplished in 2021:

  • We continued to hold weekly litigation strategy calls with LITCs to share experiences with representing taxpayers before the IRS and the courts, and to coordinate strategy, including litigation, on emerging issues.
  • In May 2021 we held the 5th International Conference on Taxpayer Rights on Quality Tax Audits and the Protection of Taxpayer Rights.  The materials and some of the videos of this session are available here.
  • In October 2021 we held the 6th International Conference on Taxpayer Rights on Taxpayer Rights, Human Rights: Issues for Developing Countries.  This conference was originally scheduled to be held in October 2020 at the University of Pretoria, South Africa.  The materials of the sessions are available here, and videos will be posted this month.
  • We held monthly online Tax Chats! with scholars and researchers on topics as diverse as Gender, Artificial Intelligence, and Administrative Burden in Tax Administration.  You can access the videos of the Tax Chats! here.
  • On May 11, 2021, I testified before the Senate Finance Committee’s Subcommittee on Taxation and Oversight on the tax gap; and on June 10, 2021, I testified on the same subject before the House Ways and Means Committee Subcommittees on Select Revenue Measures and Oversight.
  • On August 13, 2021, I testified before the Australian House of Representative’s Standing Committee on Tax and Revenue about the taxpayer bill of rights and the US Office of the Taxpayer Advocate.  The Committee issued its report this November, recommending adoption of a TBOR and that the Inspector General for Taxation adopt some aspects of the US Taxpayer Advocate.  You can read the report here.
  • We participated in a joint project on digital taxation with the World Bank, Her Majesty’s Revenue and Customs, Via University and DigiTax at the University of Antwerp; you can watch past online sessions here.

Okay, that’s a lot that we’ve accomplished.  So, what is on the docket for 2022 and why do we need your support now?  Well, in addition to continuing our work with the 7th International Conference on Taxpayer Rights (at Harvard Law School in May, 2022), Tax Chats! and all that, after the New Year we are launching a new website for the LITC Support Center, which will be just what the name says – a project of the Center for Taxpayer Rights that will provide technical support, training, and assistance to LITCs, promote pro bono representation, and ensure access to justice for low income taxpayers within the tax system.  The LITC Support Center website will include training videos and workshops for volunteer attorneys and other tax professionals, including on federal district court litigation.  The website will have a section called “Know Your Rights,” which will hold fact sheets and videos for low income taxpayers, VITA volunteers and non-tax advocates on navigating the filing season, tips for self-help, and when to seek help from a LITC.  One particular focus is survivors of domestic violence, as they attempt to receive their Rebate Recovery Payments and Child Tax Credit.

But the really big news for 2022, in addition to having Anna as a Public Service Fellow, is the launch of LITC Connect!, the dating app for LITCs and volunteers.  We’ve worked all year with our programming team to develop a really neat application.  LITCs will be able to create a profile and submit Assistance Requests for volunteers.  Volunteer attorneys, CPAs, and Enrolled Agents can create profiles, identifying the types of services they’d like to volunteer for (e.g., representation, Tax Court calendar calls, training, mentoring, providing technical advice) and the types of tax controversies they are interested in working in (e.g., audits, collection, litigation).  They can also identify areas of representation they would like additional training in, which will help us develop our training plan.  The app algorithm will then match an LITC’s assistance request with the best candidates for volunteering.

Here’s where our funding need comes in – to make this work really well, we need to hire a Pro Bono Coordinator, both to keep the app running smoothly but also to work with the clinics and the volunteers to ensure they have the support and information they need.  This is really good stuff we are launching; it may serve as a model for tax clinic programs around the world, especially in developing countries where brick and mortar infrastructure may be too expensive to implement.  But for now we need to support LITC Connect! And get it launched right.

So help the Center for Taxpayer Rights help others – donate today!

Thank you.

Happy Thanksgiving Taxatturkeys

What’s in a Name?

Identifying and addressing implicit and explicit biases are necessary to ensure that every taxpayer and tax professional recieves the benefits of “The Right to Quality Service” and “The Right to a Fair and Just Tax System.”  This free ABA outreach event at the ABA’s 38th National Institute on Criminal Tax Fraud and the Eleventh Annual National Institute on Tax Controversy will start by reviewing how tax professionals can identify bias.  The panelists will then discuss the role of the Taxpayer Advocate Service, the IRS Office of Equity, Diversity & Inclusion and the United States Tax Court in ensuring that taxpayers and tax professionals receive the full measure of procedural and substance due process necessary to protect civil rights – including the rights of disabled and Limited English Proficiency taxpayers.  You can RSVP for the event by clicking https://conta.cc/3Dhpgt6 or emailing Frank Agostino at FAgostino@AgostinoLaw.com.  For more information about the National Institute click ambar.org/CTF2021 or email Donna Prather Williams, Meetings Manager, ABACLE, Donna.Williams@americanbar.org

Chief Counsel Notice CC-2022-001 tells us to look for a new name on some documents coming out of that office.  A little over a year after the election and more than 300 days since inauguration, the new administration has not appointed anyone to serve as the new Chief Counsel.  So, the top non-political appointees continue to run the agency.  The former Chief Counsel resigned, as per tradition, when the new administration began.  The team in place at the top of Chief Counsel is quite good and quite experienced but there is some benefit to having a political appointee in place rather than individuals who must essentially work two jobs for extended periods of time.

Perhaps it’s difficult to replace the Chief Counsel because it took so long for Congress to approve the prior Chief Counsel.  Through no fault of his own, the prior Chief Counsel, Michael Desmond, had his nomination held up for quite some time as described here and here despite the fact that he was a former guest blogger for PT and had many other qualifying years of experience.  It’s not easy to put your professional life on hold for such a long period only to find your nomination is delayed because a Senator is unhappy about an IRS regulation you had nothing to do with.  Maybe the administration cannot find someone willing to go through the process or maybe it’s not trying.

Over at the Department of Justice Tax Division it seems that the White House, no matter who occupies it, no longer wants to appoint a leader.  Chief Counsel Notice CC-2022-002 tells us to look for a new name on some documents coming out of that office. The acting head, Dave Hubbert, is fantastic.  When I was District Counsel in Richmond, he was my lawyer as the head of the civil trial section of the Tax Division that covered Virginia.  I could not have asked for a better lawyer to handle the cases coming out of my office.  He is undoubtedly doing a great job running the Tax Division, but it’s now been seven and a half years since there was a political appointee at the Tax Division.  Why is it so hard to find someone to do this job?

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This leads back to the Chief Counsel Notice.  The subject of the notice is the new signature block, but the legal substance of the notice concerns the time period that limits having someone carry the title as Acting Chief Counsel (or Acting Deputy Attorney General.)  The notice explains the law:

Principal Deputy Chief Counsel and Deputy Chief Counsel (Technical) William M. Paul assumed the position of Acting Chief Counsel on January 20, 2021 upon the resignation of former Chief Counsel Michael J. Desmond. See Chief Counsel Notice 2021-003, Chief Counsel Signature Block (January 19, 2021); Chief Counsel Notice 2017-002, Designation of the First Assistant to the Chief Counsel (December 29, 2016). By operation of the Vacancies Reform Act of 1998 (5 U.S.C. § 3345, et seq.), Mr. Paul’s 300-day tenure as Acting Chief Counsel expires as of November 16, 2021. In addition, under the Vacancies Reform Act, no one may serve as Acting Chief Counsel until a nominee has been named by the President. Therefore, as of November 17, 2021, and until a nominee for Chief Counsel is named by the President, there will be no Acting Chief Counsel for the Internal Revenue Service. Instead, the duties and responsibilities of the Chief Counsel will be shared between the Principal Deputy Chief Counsel and Deputy Chief Counsel (Technical), and the Deputy Chief Counsel (Operations) for matters under their respective jurisdictions. Upon the nomination of a candidate for Chief Counsel by the President, the Principal Deputy Chief Counsel and Deputy Chief Counsel (Technical) will resume the position of Acting Chief Counsel.

In Chief Counsel’s Office the structure at the top has two deputies immediately under the political appointee, each controlling a portion of the workforce.  Mr. Paul, the Principal Deputy Chief Counsel and Deputy Chief Counsel (Technical), heads the part of Chief Counsel principally targeted at producing guidance.  Most of the employees in the National Office would eventually report up the management chain to him.  Ms. Drita Tonuzi, the Deputy Chief Counsel (Operations), heads the part of Chief Counsel that principally handles litigation.  Some of the National Office employees and essentially all of the field office employees report up the management chain to her. 

Since the clock has run on the current period during which someone can carry the title of Acting Chief Counsel, the Notice basically explains that they will each get their names on the signature block as the representative of the agency depending on the correspondence or other matter needing a formal signature.  Because Ms. Tonuzi heads up litigation, her name will now appear in documents signed by Chief Counsel in the Tax Court.  Because some documents were signed prior to November 17, 2021, using the former signature block, the Notice provides:

If a Tax Court document has been signed by a petitioner or petitioner’s representative (e.g., stipulated decision, stipulation of facts, or joint motion), but has not been sent to or e-filed with the Tax Court before November 17, 2021, the document need not be re-executed.

When Chief Counsel’s office writes to the leaderless (from a political appointee perspective) Tax Division, the person whose name appears on the correspondence will depend on which division of Chief Counsel sends the letter.  If sent by one of the divisions reporting to Mr. Paul, his signature will appear.  If sent by a division reporting to Ms. Tonuzi, her signature will appear.  I suspect the Tax Division will see many more letters with her signature because of the nature of the work referred to the Tax Division.  If regulatory guidance is issued, Mr. Paul’s name will appear much more frequently, though not exclusively.

Maybe it doesn’t matter that many readers will start to see a lot more of Ms. Tonuzi’s name until the President decides to appoint someone to become Chief Counsel, but sometimes knowing why you see a particular name provides a bit of comfort.  As long as you see these names, you also know a job opening exists for which you might want to apply.  Maybe someday the administration will appoint a new Chief Counsel, and a new head of the Tax Division at the Department of Justice.

Senators Question Commissioner About Company Offering Fee-Based Access to IRS Phone Lines

It is not news to our readers that the IRS struggles to answer the calls it receives. This frustrates taxpayers and practitioners alike. It interferes with the IRS’s ability to serve taxpayers and impedes taxpayers from understanding and meeting their responsibilities. To help address this problem, a private company, enQ, offers a fee-based service that “drastically reduces the hold time in reaching an IRS agent.”

How does it do this? According to its web-site, it was founded by an MIT trained engineer and “employs proprietary breakthrough patented technology.” The service offers a number of fee-based plans that range from about $100 to $300 a month. While directed at practitioners, it is also available to taxpayers.  To obtain a detailed understanding of the way the service works read the Forbes post cited below.  Essentially, the person who buys the services gets to jump the line of persons waiting to talk to the IRS by riding the coattails of a robo-call.

The service is controversial.

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At Forbes in Is A Private Company’s Automated Dialing Making It Impossible To Reach The IRS?Amber Gray-Fenner wrote a terrific blog post that discusses the service and situates the controversy. As Amber notes, the service implicates issues of fair play and access.

Should phone access to the IRS be dependent on resources and ability and willingness to pay?

Earlier this week Senators Cassidy, Menendez, Young and Warner wrote a letter to Commissioner Rettig. The senators criticize the service and question whether the robo-call approach that enQ apparently uses reduces the quality of phone service for those who do not use the service. The senators also question whether the Service could use Section 7212 to address the problem. That is a criminal statute used when there is an attempt to interfere with administration of internal revenue laws. As the senators explain, “being able to call the IRS is a free, public service that should be available on an equal basis. Paying to receive preferential access to the IRS should not be permitted.”

While criminal prosecution seems a bit far-fetched, the letter highlights how the IRS inability to answer phone calls is inconsistent with fundamental taxpayer rights. The bottom line is that there should not be a need for a service like enQ. The letter ends with a request for the IRS to take steps that would limit the need and demand for the service:

Finally, we ask that you take necessary action to dramatically improve the quality of service called for in the Taxpayer Bill of Rights. Hold times should be measured by minutes, not hours. The percentage of calls answered should be in the high double-digits, not the high single-digits. Improving service should be an utmost priority to the IRS.

Transcript Updates

The IRS has recently made some updates to the format of transcripts.  The National Taxpayer Advocate describes the updates in a two part blog series you can find here and here.  If you have been wondering why the transcript appearance you have grown accustomed to viewing is different, read the posts to gain a better understanding of the format changes the IRS has adopted.  If you do not regularly read transcripts, you might read the posts in order to understand what is available to you on the various transcripts that the IRS offers.  In my clinic transcripts provide the basic building block for any collection case and often provide useful information on cases involving a contest on the merits.

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The blog posts also describe the path to obtaining transcripts which has changed recently for the better.  We went through a period where I felt we were operating almost in the dark because it became so difficult to obtain transcripts.  The change over the last several months to electronic submission of transcript requests has significantly improved the process and should take pressure off of the IRS since the inability to obtain transcripts going through the Centralized Authorization File (CAF) unit causes practitioners to tie up precious phone lines trying to obtain transcripts.  The description in the post includes a description for individuals seeking to obtain their own transcripts.  For individuals with computer access, computer skills and the proper identification, this can provide an easy means to gaining information about their status with the IRS.

One of the changes described in the NTA’s posts concerns masked and unmasked wage and income transcripts.  I asked for clarification on the terminology which I did understand after reading the first post.  Here is the explanation:

The new transcript partially masks personally identifiable information, leaving only a portion of this information visible.  The new format is referred to as a masked transcript, while transcripts that fully show all personally identifiable information are referred to as unmasked transcripts.  The following information is visible on a masked transcript:

● Last four digits of any SSN on the transcript: XXX-XX-1234
● Last four digits of any EIN on the transcript:  XX-XXX1234
● Last four digits of any account or telephone number
● First four characters of first name and first four characters of the last name for any individual (first three characters if the name has only four letters)
● First four characters of any name on the business name line (first three characters if the name has only four letters)
● First six characters of the street address, including spaces
● All money amounts, including wage and income, balance due, interest and penalties

Working at the IRS Chief Counsel’s Office I had the luxury for many years of having access to individuals with deep expertise in reading the IRS transcripts.  Because I read them for many years and had numerous tutorials while working there, I have a head start on someone unfamiliar with the way the IRS records transactions.  Learning how to read transcripts can unlock many secrets.  We should probably have more CLE training on this “art” because there is much to learn.  Kudos to the NTA for aiding in this process.

Preview of This Week’s ABA Tax Section Virtual Fall Meeting

The ABA Section of Taxation kicked off its Fall Meeting virtually yesterday, with a plenary address by Thomas A. Barthold, Chief of Staff, Joint Committee on Taxation, followed by CLE programs from the Corporate Tax, Employee Benefits, State & Local Tax, and Transfer Pricing committees. A full week of programming follows, starting at 10:30 AM Eastern each day.

I will preview several sessions of interest in this post. The full program is available here, with the “schedule at a glance” here. To register, click here. (Registration is free for J.D. and LL.M. students, and $25 for LITC practitioners.)

Sessions are all held live, but registrants can also view sessions on replay – a major bonus of the virtual format for those of us who like to attend multiple committee meetings and for those with conflicting obligations.

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The CLE sessions presented yesterday are already available for viewing, as is the plenary address, Rewriting the Internal Revenue Code in a Pandemic, presented by Thomas A. Barthold, Chief of Staff, Joint Committee on Taxation. Those curious about the budget reconciliation process, the Byrd rule, and what tax writing looks like on the ground will find it illuminating and thought-provoking. The plenary session also includes remarks by Julie Divola, Chair of the Tax Section, by Wells Hall, Chair-Elect, and by Caroline Ciraolo, Vice Chair of Membership, Diversity & Inclusion.  

Readers of this blog may be interested in the panels happening at the Administrative Practice, Individual & Family Taxation, Civil & Criminal Tax Penalties, Court Procedure & Practice, Diversity, Tax Collection, Bankruptcy and Workouts, and Teaching Tax Committees, as well as the Pro Bono and Tax Clinics Committee. There are too many excellent panels to highlight them all here. Several committees also offer informal networking events, and the week ends with the always excellent Women in Tax Forum. I encourage readers to check out the full program and the schedule at a glance.

The Civil & Criminal Tax Penalties committee offers two programs today, at 12:30 and 2:30 p.m. ET. Part One includes subcommittee reports on important developments, followed by a cutting-edge discussion evaluating taxpayers’ exposure from their participation in COVID relief programs. Part Two presents additional important developments, and a final panel on taxpayer privacy versus the public’s right to know at 3pm, at which PT contributor Nina Olson is speaking.

Taxpayer Privacy v. The Public’s Right to Know. In the wake of the Watergate scandal Congress substantially increased the statutory protections for taxpayer privacy, including imposing criminal penalties for various forms of unauthorized disclosure. At the same time, the First Amendment provides for freedom of the press and journalists are tasked with informing the public on matters of national import. Recently, high profile leaks of tax return information have led to blockbuster reports by ProPublica (on the tax strategies of high net-worth individuals) and the New York Times (on former President Trump’s tax returns), among others. This panel will explore what I.R.C. §§ 6103 and 7213 protect and prohibit, how these laws potentially interact with the First Amendment, how newsrooms think through the legal and ethical questions surrounding the publication of leaked or stolen information, and more.

Moderator: Benjamin Eisenstat, Caplin Drysdale, Washington, DC

Panelists: Jesse Eisinger, Senior Reporter & Editor, ProPublica, Washington, DC; Cara Griffith, President and CEO, Tax Analysts, Washington, DC; Nina Olson, Executive Director, Center for Taxpayer Rights, Washington, DC; Jenny Johnson Ware, McDermott Will & Emery, Chicago, IL

The Administrative Practice committee teams up with the Court Procedure & Practice committee to present three joint sessions tomorrow. The Current Developments program at 10:30 ET is sure to be of interest to PT readers. The second program at 12:30 p.m. ET concerns CIC Services, which PT has covered in many prior posts, several of which can be found here, with Les’s most recent post here. The third session focuses on John Doe Summonses and begins at 2:30 p.m. ET on Wednesday.

Current Developments. This panel will include a report from the Tax Court, as well as a discussion of significant IRS guidance and pending litigation.

Moderators: Kandyce Korotky, Covington & Burling LLP, Washington, DC; Michael J. Scarduzio, Jones Day, New York, NY

Panelists: The Honorable Emin Toro, U.S. Tax Court, Washington, DC; Richard G. Goldman, Deputy Associate Chief Counsel (Procedure & Administration) Office of Chief Counsel, IRS, Washington, DC; Natasha Goldvug, Department of Treasury, Washington, DC (Invited)

CIC Services, LLC v. Internal Revenue Service: Opening the Floodgates to Pre-Enforcement Tax Litigation? In a unanimous decision, the Supreme Court held that the Anti-Injunction Act’s bar on lawsuits for the purpose of restraining the assessment or collection of taxes did not bar a pre-enforcement challenge under the Administrative Procedure Act of an IRS reporting rule backed by tax penalties. This panel will discuss helpful background regarding the Anti-Injunction Act and Administrative Procedure Act; examine the facts of the case and key arguments presented to the Court by the parties and amici curiae; and debate the implications of the Court’s ruling for pre-enforcement lawsuits challenging the validity of Treasury and IRS rules and regulations.

Moderator: Antoinette Ellison, Jones Day, Atlanta, GA

Panelists: Bryan Camp, Texas Tech University School of Law, Lubbock, TX; Kristin Hickman, University of Minnesota Law School, Minneapolis, MN; David W. Foster, Skadden, Arps, Slate, Meagher & Flom LLP, Washington, DC; Gil Rothenberg, former Chief of the Justice Department Tax Division’s Appellate Section, Adjunct Professor of Law at American University’s Washington College of Law, Washington, DC

Also on Wednesday afternoon, Teaching Taxation presents an important program on promoting diversity, equity, and inclusion in tax at 12:30.

Promoting Diversity, Equity, and Inclusion in Tax: Ideas and Resources for Mentoring Diverse Students and Leading Discussions of DEI in Tax. (Recommended for Young Lawyers) “We will all profit from a more diverse, inclusive society, understanding, accommodating, even celebrating our differences, while pulling together for the common good.” Ruth Bader Ginsburg. “Diversity requires commitment. Achieving the superior performance diversity can produce needs further action − most notably, a commitment to develop a culture of inclusion. People do not just need to be different, they need to be fully involved and feel their voices are heard.” Alain Dehaze. This panel will document the need for greater diversity in the field of tax law − in practice and in Academia – and share ideas to promote this goal, with a focus on law students and recent law school graduates. The panelists will (1) provide information about existing programs to promote DEI in the tax profession, (2) discuss ways to build the tax profession pipeline, to recruit and retain diverse tax attorneys, and to provide strong platforms for professional success, and (3) solicit audience participation and ideas for new initiatives.

Moderator: Katie Pratt, Professor of Law and Sayre Macneil Fellow, LMU Loyola Law School Los Angeles

Panelists: Professor Alice Abreu, Honorable Nelson A. Diaz Professor of Law and Director, Temple Center for Tax Law and Public Policy, Temple University Beasley School of Law, Philadelphia, PA; Caroline D. Ciraolo, Kostelanetz & Fink, LLP, inaugural Vice Chair, Membership, Diversity, and Inclusion, Tax Section Council, ABA; Professor Steven Dean, Brooklyn Law School; Honorable Juan F. Vasquez, US Tax Court; Lany L. Villalobos, Kirkland & Ellis, LLP, Assistant Secretary, Tax Section Council, American Bar Association (2021-2022), Immediate Past-Chair, ABA Tax Section Diversity Committee

Wednesday afternoon’s programming continues with a Diversity Committee session on return preparer fraud at 2:30 p.m.

Protecting Vulnerable Taxpayers Against Tax Preparer Fraud. (Recommended for Young Lawyers) Many taxpayers turn to paid tax preparers to help them navigate the tax code and accurately prepare their tax returns each year. While most tax return preparers are qualified and professional, unscrupulous tax return preparers do exist and can cause financial hardship and legal problems for the taxpayers who hire them. This is especially true for low-income taxpayers and other vulnerable communities. This panel will provide a comprehensive discussion of tax return preparer fraud and how to help those who have been taken advantage of by unethical tax return preparers. Panelists will identify resources to report tax return preparer fraud and what options are available to taxpayers to help remedy the damage caused by the tax return preparer. Lastly, the panel will discuss regulation of tax return preparers and what steps the tax community can take to reduce the risk of tax return preparer fraud.

Moderator: Shahin Rahimi, Legal Aid Society of San Diego, San Diego, CA

Panelists: Hana M. Boruchov, Boruchov Gabovich & Associates PC, New York, NY; Omeed Firouzi, Philadelphia Legal Assistance, Philadelphia, PA; William Schmidt, Legal Aid of Western Missouri, Kansas City, MO; Patrick W. Thomas, Frost Brown Todd, Louisville, KY

The Pro Bono and Tax Clinics committee presents two programs on Thursday morning. The first panel highlights administrative barriers that often prevent low-income taxpayers from receiving tax benefits to which they are entitled. This discussion is extremely timely as Congress debates whether to extend advance CTC payments.  We have covered problems with the IRS identity verification program here and here. Nina Olson wrote about problems with customer service and return processing recently here.

The second panel on determining a taxpayer’s “last known address” under the Code is a topic that has also prompted many PT posts.

Barriers to Tax Benefits: Resolving ID Verification and Payment Delivery Issues. (Recommended for Young Lawyers) The CARES Act and American Rescue Plan Act expanded numerous important benefits for low-and-middle income individuals delivered through the tax code -for example, the Advance Child Tax Credit and the Recovery Rebate credits. This panel will discuss numerous barriers that have emerged in getting those payments to the rightful recipients including ID verification issues, payments to the unbanked, and working with incarcerated individuals and the housing insecure.

Moderator: Anthony Marqusee, Philadelphia Legal Assistance, Philadelphia, PA

Panelists: Laura Baek, IRS TAS, Washington, DC; Barbara Heggie, Low-Income Taxpayer Project, Concord, NH; Nanette Downing, Director of Identity Assurance, IRS, Washington, DC; Denise Davis, Director of Return Integrity Verification Program Management, Atlanta, GA

A Simple Question with a Complicated Answer: Determining a Taxpayer’s Last Known Address. (Recommended for Young Lawyers) Many IRS notices are required to be mailed to a taxpayer’s “last known address.” Failure of the IRS to properly mail such notices can carry profound consequences. Determining exactly what a taxpayer’s last known address should be, however, is increasingly contentious. This panel will review the regulatory and subregulatory guidance on what is required for a taxpayer to effectively change their address with the IRS. It will also discuss how the recent 3rd Circuit decision Gregory v. Commissioner and the online IRS “portals” may affect this area of law.

Moderator: Briana Fehringer, Partner at Anderson & Jahde, P.C., Littleton, CO

Panelists: Christopher Valvardi, IRS Office of Chief Counsel (P&A), Washington, DC; Audrey Patten, Harvard Legal Services Center, Jamaica Plain, MA

Speaking of IRS customer service, on Friday the Individual & Family Taxation Committee presents a two-part session featuring IRS Wage & Investment Commissioner Ken Corbin.

The Service of the Service: Interacting Now and in the Future. (Recommended for Young Lawyers) This two-part panel will examine the current state of IRS customer service and how technology may transform how the IRS interacts with taxpayers. Part one will focus on common scenarios that taxpayers, practitioners, and IRS personnel have faced with the continuing backlog of correspondence and return processing. The panel will focus on how practitioners have attempted, with varying degrees of success, to resolve these problems. It will bring together viewpoints from private practice, tax clinicians, the Taxpayer Advocate, and the IRS. Part two will focus on strategic IRS initiatives to use Artificial Intelligence (AI) and data analytics to automate core components of customer service – some already in testing. The panel will discuss the IRS’s concierge service initiative, which will be AI-driven with some IRS representative collateral support, and how the initiative interacts with the broader Taxpayer First Act implementation programs. The panel will explore issues of equity in accessing responsive service by different taxpayer populations.

Part One Panelists: Kenneth C. Corbin, Commissioner, Wage & Income Division, IRS, Atlanta, GA; Andrew VanSingel, Local Taxpayer Advocate, IRS, Chicago, IL; Olena Ruth, Ruth Tax Law, Denver, CO; W. Edward (Ted) Afield, Clinical Professor of Law and Director, Philip C. Cook Low Income Taxpayer Clinic, Georgia State University, Atlanta, GA

Part Two: Joshua Beck, Attorney Advisor, Taxpayer Advocate Service, Des Moines, IA; Leigh Osofsky, Professor of Law, University of North Carolina School of Law, Chapel Hill, NC; Joshua Blank, Professor of Law, University of California, Irvine School of Law, Irvine, CA; W. Edward (Ted) Afield, Clinical Professor of Law and Director, Philip C. Cook Low Income Taxpayer Clinic, Georgia State University, Atlanta, GA

Taxpayer Rights as Human Rights: Registration is open for the 6th International Conference on Taxpayer Rights

Back in pre-pandemic days, the Center for Taxpayer Rights planned to hold its 5th International Conference on Taxpayer Rights (ICTR) at the University of Pretoria in South Africa in October 2020.  We had a fascinating theme – Taxpayer Rights, Human Rights: Issues for Developing Countries.  We’d pulled together a great group of panelists, the locations in Pretoria were terrific, there was lots of excitement.

And then COVID hit.  We postponed the conference to October 2021, hoping we would be able to be there in-person.  Unfortunately, that is not to be; the University is pretty much operating remotely, and travel is restricted on the African continent.

But we are not deterred – the Center is holding the 6th ICTR online, from 05 to 08 October, 2021.  We will be having two panels a day, to accommodate all the different time zones.  The Conference will kick off with a free online workshop on 05 October on The Role of Tax Clinics and Taxpayer Ombuds/Advocates in Protecting Taxpayer Rights.  You can see the agenda here.  And you can register for the conference here.

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Now, you may be thinking to yourself, this is not for me; I don’t practice tax law in a developing country.  Here are a few reasons why you might want to attend this conference.  First of all, I have to say that I have spent a lot of time over the last two decades meeting and working with different tax administrations; there are many things the US can learn from other tax agencies and systems, especially in terms of taxpayer service, technology, data use, and online accounts.  Developing countries often aren’t weighted down with legacy systems that require Rube Goldberg-like workarounds.  Every time I met with folks from another country’s tax agency, I learned something new about tax administration and also about my own country’s tax system vis a vis theirs.  This information is helpful when trying to improve our own system.

But there is a more important reason to focus on the issues raised when thinking about taxpayer rights as human rights in the context of developing countries.  Unlike developed countries, which have established tax systems and administrative structures, and a fairly high level of voluntary compliance, developed countries are … developing those things.  They cannot take anything for granted.  Most of them have emerged from colonial (read paternalistic/infantilizing) regimes.  They are wrestling with pandemics, unemployment, droughts, civil war and strife.  And they are trying to meet the basic needs of their population and provide them some human dignity.

Human dignity is at the heart of human rights.  And human dignity is the rationale behind government – that together we can meet the needs of the populace.  The United Nations has established 17 Sustainable Development Goals that governments should seek to achieve.  Governments must have funds to fulfill those goals and meet the needs of their people.  Developing countries often have young constitutions, with explicit recognition of human rights and the social contract between the government and its citizens.  Taxation is a key means for a state to fulfill that social contract.  These countries are wrestling with elemental principles that developed countries take for granted.  By taking them for granted, developed countries often forget why taxation exists – they forget first principles.

So, to that end, I encourage you to register for and attend the 6th International Conference on Taxpayer Rights.  It should be fascinating and give cause for reflection about our own status as a “developed” country.

Here’s the link for more information about and to register for the conference.

The Current State of Taxpayer Service (or Lack Thereof) at the IRS

In my written testimony for a recent hearing before the Ways and Means Subcommittees on Select Revenue Measures and Oversight about the tax gap, I discussed some of the current state of taxpayer service at the Internal Revenue Service (IRS) and the many causes for refunds being delayed in the processing of tax returns.  In a normal filing season, refunds may be stopped because of suspicion of identity theft, or omitted or understated wage income or overstated tax withholding.  They may be stopped for “math error” processing for any number of reasons, including incorrect social security numbers.  As the National Taxpayer Advocate, I regularly focused (here and here) on the high “false positive rates” of these programs.  That is, the IRS froze many more returns that ultimately turned out to be legitimate refund requests than were fraudulent.  For example, for the 2020 filing season, the National Taxpayer Advocate reported that IRS refund fraud filters froze 3.2 million individual income tax returns on suspicion of refund fraud.  Of those 3.2 million refund suspended returns, 66 percent – almost two-thirds — were false positives, meaning they were legitimate refund requests.  (See footnote 19 in NTA report.)  For a quarter of the frozen returns, it took the IRS longer than 56 days to release them to normal processing. 

This year is a far from normal filing season.  The IRS is grappling with reconciling various new provisions including the Rebate Recovery Credit, exclusion of unemployment benefits from income, and the “look-back” provision for the Earned Income Tax Credit.  These provisions have resulted in many more returns being suspended and requiring some form of manual review before processing, posting, and refund issuance can resume.

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The National Taxpayer Advocate has reported (Figure 2, Filing Season Report) that for Filing Season 2021, through May 21, 2021, the IRS received 148 million individual income tax returns and processed 135.7 million such returns.  The remaining 12.3 million were stuck in various stages of review.  This number under review is almost twice the number of returns unprocessed at the end of the 2020 filing season (6.3 million were suspended as of July 15, 2020).  Elsewhere,  the National Taxpayer Advocate has reported that as of May 21, 2021, the IRS had over 35 million individual and business tax returns either suspended or “in process” but requiring manual processing before the return can move along and refunds issued (Figure 3, Filing Season Report).

Included in these “frozen” returns are 9.8 million individual tax returns sitting in the Error Resolution System (ERS), up 544 percent from the 2020 filing season, and 2.1 million individual income tax returns still suspended for Identity verification, up 91 percent from the 2020 filing season.  Trying to get through to the IRS to resolve these issues is nearly impossible.  During the 2021 filing season, the IRS received 167 million calls on all its lines, up 294 percent from the year before; only 15.67 million of those calls reached a live assistor.  On the 1040 phone line, which is the main phone number for individual income tax assistance, the IRS received 85 million calls, up 978 percent from the 2020 filing season, with only 3 percent reaching a live assistor.  (Figure 5, Filing Season Report.)

If a taxpayer’s refund return is selected for identity verification (on suspicion of identity theft), the taxpayer is required to verify their identity through an online tool, or by telephone, or at an appointment at the Taxpayer Assistance Center (TAC).  Taxpayers have reported being unable to verify online, unable to get through to the phone verification system, unable to reach the TAC appointment line, and if they are able to get a TAC appointment, it is 9 weeks later.  The phone identity verification line received over 6 million calls this filing season, with a 19 percent level of service, meaning 4 out of 5 calls could not get through to verify their identity and get their refund released.

What can be done to fix this?  First, technology, artificial intelligence, and data science can play an important role.  Many of the IRS’ fraud detection and questionable refund filters are rule-based.  That is, a fixed rule is broken, then a return is selected and must be manually reviewed; often the taxpayer must supply additional information.  From year to year, the IRS does not do a good job of learning from the cases where its filters incorrectly identified a return.  The IRS needs to work with data scientists and artificial intelligence experts to design a fraud/error detection system that is not rule-based but rather learns from the returns that actually turned out to be fraudulent, as well as those that were frozen and ultimately determined to be legitimate.  In short, IRS systems need a continuous feedback loop so it minimizes the false positive rate and improves on its initial selection of returns.  To date, the IRS has refused to set goals for reducing the false positive rate on its fraud detection system.  The data cited above show the urgent need for the IRS to set these goals and act on them.  Congress should require it to do so.

Second, the IRS can use programming to minimize taxpayer errors.  In the 2009 filing season, in which taxpayers were reporting the Economic Stimulus Payments (ESPs) they received in 2008, the IRS had a system by which taxpayers (and their preparers) could look up the amount of ESP they received.  The IRS did not replicate this system for the 2021 filing season.  Thus, according to the National Taxpayer Advocate, 5 million returns were suspended in Submission Processing to reconcile Economic Impact Payments with Rebate Recovery Credits.  For the 2022 filing season, Congress should require the IRS to create a similar look-up system for the Advanced Child Tax Credit; otherwise we will have the same return backlog in 2022 as we have today.

The IRS also could program, as part of the submission processing pipeline, the ability to systemically look back to the 2019 modified adjusted gross income, where a taxpayer claimed the “look back” rule for EITC eligibility.  Instead, millions of returns were suspended for manual review because the IRS did not program this.  While I realize this may not have been possible for the 2021 filing season, given the late enactment of the look back provision, if Congress makes the EITC look back rule permanent, it should require the IRS to systemically check for eligibility.  This approach not only reduces the number of returns that must be manually verified but will also identify returns on which the look back was not but should have been claimed.

On top of all this, the Taxpayer Advocate Service (TAS) has at the top of its homepage on its website a statement as follows: “Refund Delayed? Our ability to help may be limited.”  TAS is supposed to be the safety net for taxpayers experiencing significant hardship; yet TAS is unavailable for most taxpayers experiencing refund delays this year.  This is unacceptable, and a violation of the right to a fair and just tax system.  I do not know why TAS has decided it is unable to help these taxpayers; what I do know is that taxpayers are losing faith in TAS.

Third and most importantly, the IRS taxpayer service functions need a significant and steady funding increase.  Congress should scrutinize the IRS projections for the number of calls it receives.  When refunds are frozen, online services are just not satisfactory; taxpayers want to talk to a live human being.  Congress should require the IRS to tell it how many assistors will be required to answer 85 percent of the calls coming in.  Congress should require the IRS to project how many returns it expects to suspend for identity theft and questionable refund issues, and what level of staffing it needs in ERS and the identity theft/refund fraud units to resolve those issues within 14 days.  Congress should require the National Taxpayer Advocate to project the number of cases they would receive if they were willing to assist taxpayers with refund issues.  With all of this information, Congress can then appropriate the funds necessary to get staffing levels up in all these functions so U.S. taxpayers get the assistance and service they deserve.

These are resolvable problems.  The Commissioner regularly points out in oral testimony that Congress only appropriated funding for a 60 percent level of service in FY 2021.  What the Commissioner omits saying is that the President’s budget for that year only requested funding for that level of service.  (See page 85 of FY 2021 President’s Budget Request for Treasury here.)  Thus, Congress funded 100 percent of what the President/IRS requested.  So, to start transforming taxpayer service, the IRS must be transparent about the abysmal quality of service it is currently providing taxpayers and provide Congress with a budget request that reflects the level of service taxpayers need to comply with the tax laws.  No more of this 60 percent nonsense!  Then, as Michelle Singletary wrote in her recent column, the IRS will be able to pick up the damn phone.