One of the best things to come out of the 1998 Congressional Hearings about the IRS was the Taxpayer Advocate Service (TAS). They are tasked with being the “police” of the IRS, headed by Nina Olson who reports to Congress about what is going on at the IRS.
During her last testimony before Congress, she tackled something the IRS figured out a long time ago. The IRS rolled out collection companies twice, both times they failed. There were many reasons why they failed, however, Congress made collection by a collection agency part of a Federal Law. Getting rid of collection agencies will literally take an act of Congress.
All the collection agencies can do is receive payment in full or an Installment Agreement (IA). The problem is what the problem was before, that those being targeted live sometimes 200 percent below the poverty line. As such, these people need to be put on the currently not collectible status (CNC).
Ms. Olson pointed out that these low income taxpayers were intimidated by the collection companies to enter into IA’s that they clearly couldn’t afford. In fact, the debt of SSA income recipients were turned over to collection agencies. In Publication 1 you are afforded the right to representation which these people can’t afford.
Another issue Ms. Olson tackled was the IRS giving incorrect tax advice to taxpayers. Now, this has been a practice for a long and at one point when you were on hold with the IRS, the recording would say that IRS employees are not responsible for tax advice. So what are they responsible for?
In 2014, the TAS made the IRS change these practices and now they can only give tax advice during tax season, however that has expanded with the passage of the new tax code. There are other recommendations by Ms. Olson on this issue.
My two cents are that the IRS needs to be given $200 million to upgrade the computer system, which actually failed on tax day. In addition, they need about $25 million for enforcement. Along with this implementation we need a way to electronically and securely communicate with the IRS.
When eServices came out, it would fascinate me how much work I could get done. In 24 years of practice, 9-5 for me is spent on the phone and in appointments. The only time I have time to do actual work is in the mornings or on weekends when the IRS is closed.
The problem is the TAS was created to give reports to Congress about the health and fitness of the IRS. The TAS came out of the infamous 1998 Congressional Hearings where the public complained about the IRS’s aggressive techniques of collecting taxes, and enforcement.
The TAS was supposed to police the Service and make recommendations to Congress, who seems to have quit listening a long time ago. I have a ton of respect for Ms. Olson, but I’m afraid most of her message to Congress is falling on deaf ears.
Simple economics, or even business, dictates that if you limit your accounts receivable department you won’t get as much money that is owed to you. In this case we have professionals like EAs, CPAs and Tax Attorneys to advocate on our clients' behalf.
However, any automated process with the IRS is messed up so badly that you if tell a client that something was taken care of, a notice will come about the same thing creating a rift between your client and you. In fact, I got fired for something because a Revenue Officer (RO) wouldn’t call me back.
In economics we discuss a concept called the law of diminishing returns. What that means is a business can expand only so much before their profit margins take a hit. They can’t go any further and what skews this law is technology.
With technology you can do your work more efficiently. I know with technology, one Staff Accountant can handle 150 accounts or so. Ms. Olson goes on to say that over half of the IRS’s records are paper. Well, it’s 2018 and no one uses paper anymore! This recent address from Ms. Olson should be a wake up call as these reports just progressively get worse.
About Craig W. Smalley, EA
Craig W. Smalley, MST, EA, has been in practice since 1994. He has been admitted to practice before the IRS as an enrolled agent and has a master's in taxation. He is well-versed in US tax law and US Tax Court cases. He specializes in taxation, entity structuring and restructuring, corporations, partnerships, and individual taxation, as well as representation before the IRS regarding negotiations, audits, and appeals. In his many years of practice, he has been exposed to a variety of businesses and has an excellent knowledge of most industries. He is the CEO and co-founder of CWSEAPA PLLC and Tax Crisis Center LLC; both business have locations in Florida, Delaware, and Nevada. Craig is the current Google small business accounting advisor for the Google Small Business Community. He is a contributor to AccountingWEB and Accounting Today, and has had 12 books published on various topics in taxation. His articles have also been featured in the Chicago Tribune, New York Times, Yahoo Finance, Nasdaq, and several other newspapers, periodicals, and magazines. He has been interviewed and been a featured guest on many radio shows and podcasts. Finally, he is the co-host of Tax Avoidance is Legal, which is a nationally broadcast weekly Internet radio show.