A Few Thoughts About The National Taxpayer Advocate’s Fiscal Year 2018 Objectives Report
Today’s blog is short and sweet because . . . well, because today we are releasing the 295-page National Taxpayer Advocate’s Fiscal Year 2018 Objectives Report to Congress, and that’s enough reading for anyone! By way of background, in IRC § 7803(c)(B), Congress required the National Taxpayer Advocate to submit two reports to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate before any officer or employee of the IRS, the Treasury Department, or the Office of Management and Budget sees them. Most readers are familiar with the report due on December 31 of each year, which includes discussions of twenty of the most serious problems facing taxpayers, as well as legislative and administrative recommendations. But there is another report — the Objectives Report — that is due on June 30th of each year.
Unlike the December report, about which Congress listed eleven different items for inclusion (including my all-time favorite — “such other information as the National Taxpayer Advocate may deem advisable”), the instructions for the Objectives Report are remarkably concise: “the National Taxpayer Advocate shall report . . . on the objectives of the Office of the Taxpayer Advocate for the fiscal year beginning in such calendar year. Any such report shall contain full and substantive analysis, in addition to statistical information.” IRC § 7803(c)(2)(B)(i).
It has taken us a while to hit upon the right balance of topics, because there is always a risk that objectives reports turn into a “to do” list with dry, bureaucratic language. A good starting point for navigating the report is my Preface, which sets the theme of the report and highlights the things that keep me up at night worrying. Next, we’ve decided that given the timing of the report (mid-year), one of the most helpful things we can do is provide a review of the most recent filing season, and then lay out areas of tax administration on which TAS will focus its advocacy efforts. Thus we have thirteen Areas of Focus, including the following topics: Private Debt Collection, Passport Denial or Revocation; Offshore Voluntary Disclosure Programs; International Tax Administration; Online Accounts; Earned Income Tax Credit Administration; Individual Taxpayer Identification Numbers; Allowable Living Expense Standards; Retirement Account Levies; Tax-Related Identity Theft; Affordable Care Act; Third Party Contacts; and Enterprise Case Management.
Additional sections include discussions of our plans to improve our advocacy on behalf of taxpayers — both in terms of operations and information technology. Much of this is operational, but it is interesting if you are curious about the inner workings of government and organizational behavior. And we have a section discussing our research initiatives for the next fiscal year. I’m enormously proud of my small but impressive research staff. They produce very valuable studies that provide important information the IRS can and should use to improve its programs.
Which brings me to the final section of the Objectives Report — the Volume 2! This second volume contains a summary of the Most Serious Problems we identified in the National Taxpayer Advocate’s 2016 Annual Report to Congress, along with our recommendations. Under IRC §7803(c)(3), the Commissioner has to establish procedures to formally respond to all of the National Taxpayer Advocate’s recommendations within 3 months of submission to the Commissioner. Thus, our second volume also includes the Commissioner’s formal response to my recommendations, and TAS’s response to the IRS response.
Over the past years, on average the IRS has agreed with about fifty to sixty percent of our administrative recommendations. This year, for some reason, the IRS has only agreed with 38 percent. That drop is notable, and I personally think it reflects the retrenchment of the IRS in light of budget constraints — it is more and more often saying that it can’t do things that make perfect sense in a normal world. I also think we are seeing the surfacing of a tax administration philosophy that is much less taxpayer-facing and interacting, which is problematic on many fronts. But the IRS and TAS back-and-forth is definitely worth reading. It is rare to get this level of dialogue and transparency in government operations. That is one of the benefits of the Annual Reports to Congress and the result of a well-crafted statutory provision establishing these reports.
And speaking of transparency, recall that IRC § 7803(c)(2)(B)(i) requires the National Taxpayer Advocate to include “statistical information.” Every year, we in TAS come up against some data the IRS does not want us to publish. Usually the reason given is that it is for “Official Use Only” and therefore not subject to disclosure under the Freedom of Information Act. In most instances, we are able to work through the concerns and reach agreement about what to disclose and what not to. But this year we weren’t able to reach agreement on one important item. We wanted to publish some “statistical information,” per my statutory mandate, in our Area of Focus about the IRS’s Offshore Voluntary Disclosure initiatives. The IRS likes to make public the amount of dollars these programs have brought in, but other than that, it provides very little information. In light of the paucity of “statistical information,” we find it very difficult to assess the effectiveness of these programs.
The IRS informed us that we could not publish any statistical information about these programs more detailed “than those provided by the Commissioner in press releases.” On its face, this position is ludicrous and, carried to its logical conclusion, would mean neither the National Taxpayer Advocate, nor the Treasury Inspector General for Tax Administration, nor the Government Accountability Office would be able to do their respective jobs. I am required by Congress to provide statistical information: “Any such report shall contain full and substantive analysis, in addition to statistical information.” To fulfill this statutory requirement, I have included the statistical information in the report. But to keep my job, since the IRS is amorphously arguing I cannot publish it, I have redacted this information; we will be glad to provide it to Congress upon request.
Next week we will begin a three-part discussion of the IRS Private Debt Collection program. In the meantime, happy reading of the report, and Happy Independence Day!
Read more about the National Taxpayer Advocate’s report to congress and other tax updates at: www.taxpayeradvocate.irs.gov.