Wednesday, March 4, 2009

IRS Taxpayer Advocate

Ok. I apologize in advance. This isn't really a *political* rant. But my first thought on reading this morning's article in Forbes made me think...

[Long, drawn out silence. Crickets chirping.]

Oh, sorry... I was thinking that I didn't even know the IRS had anything remotely resembling some kind of advocacy for taxpayers. So I went to the IRS site. And searched for "Taxpayer Advocate." Sure enough, you can read all the reports they've submitted over the years. I'm again stunned into silence. My bet, of course, is that the IRS doesn't read them, because they certainly haven't taken any of the recommendations to heart. ::snort::

So what does Nina Olson, our taxpayer advocate, have to say? The tax laws are too complicated. People with lots of money hire other people to get them out of paying taxes. People without lots of money overpay because they don't have lots of money to hire someone. There were 500 changes to the tax code in 2008, and most people have no clue what those changes were. There's a Mortgage Forgiveness Debt Relief Act, but the form to fill that out isn't available in most software packages. In short, it's 27 pages of how insane the IRS tax code is. Scary, stunning reading.

In closing, she recommends:

"The tax laws should be simple enough so that most taxpayers can prepare their own returns without professional help, simple enough so that taxpayers can compute their tax liabilities on a single form, and simple enough so that IRS telephone assistors can fully and accurately answer taxpayers' questions. The tax system should incorporate a periodic review of the tax code--in short, a sanity check."

IRS and "sanity check". Now THERE'S a contradiction in terms!

3 comments:

Blondie said...

Oh, what fun! The IRS!

Seriously. The IRS and the tax code are a joke. It cracks me up that the tax advocate admits that the laws are too complicated for the average citizen to figure out. I am a little unclear on this: are the tax advocates actual IRS employees?

The article also talked about the AMT. I could rant for years on the AMT. Ask me why sometime!

Forbes talked about a flat tax - I am all for it! Call it a flat tax or a consumption tax - doesn't matter to me - but just simplify it! As it is now, there are too many loopholes - good and bad.

*stepping off of my soapbox now*

Zana said...

I used to think a flat sales tax was a bad idea, but the older I get the more I think, "you know, that does make sense, doesn't it?"

I haven't had much experience with the AMT... I'd love to hear your take on it, though. (You can email me if you feel so inclined!)

Taxpayer_Owner said...

Sure Ms. Olson has talked about the IRS’s shortcomings, ruffled a few feathers, and wrote some tough reports. Unfortunately, Ms. Olson has not been able to get very much accomplished in her seven years on the job other then create a high employee turnover rate. She tried to simplify the tax code by creating a standard definition of a child. When all was said and done, she only made matters worse. So much worse, the law had to be amended.

Ms. Olson also destroyed the very program in the IRS that was set up to assist taxpayers. Before Ms. Olson, if you needed help with a tax problem that was not dealt with satisfactorily through normal channels the IRS would transfer your case over to a group that had the experience in your particular issue and the authority to fix your problem on the spot. Ms. Olson has forsaken this logic. Now if you need help and your case is transferred over to her program it will most likely be assigned to someone that is not experienced or even properly trained to assist you. Moreover, even if the employee understands your situation they will not be able to fix it. They will have to turn around and request the IRS to fix it. Not only is this a poor way to assist taxpayers it also costs taxpayers more money.

The Taxpayer Advocate’s office has an important role of advocating for all taxpayers. While Ms. Olson does an adequate job of this, she does not advocate very well for the individual taxpayer who comes into her office for assistance. For that reason, her employees that work with taxpayers should be reassigned back to the IRS where they will be better trained and better able to quickly assist taxpayers in their moment of need.