National Taxpayer Advocate Nina Olson recently released her FY 2018 Objectives Report to Congress summarizing the recent filing season and future goals to improve Internal Revenue Service (IRS) interactions with US taxpayers.
Ordinarily, the taxpayer has the burden of proving a tax return is accurate. But when the IRS has to produce documents, its record-keeping practices are lacking. The Treasury Inspector General for Tax Administration (TIGTA) released a report on July 13, 2017, that found that the IRS' electronic record retention policies do not comply with certain Federal requirements that records remain retrievable and usable for the time period needed. For example, e-mail messages are not automatically archived for all IRS employees, and the manual methods used to counteract this gap are inadequate when computer hard drives are destroyed or damaged as media storage policies and tools change.
The Internal Revenue Service (IRS) will now return without consideration any Offer in Compromise applications submitted by taxpayers who have not filed all required tax returns. The application fee will be returned to the taxpayer, but any initial payment submitted with the returned application will be applied to outstanding tax debt. An updated Offer in Compromise Booklet (Form 656-B) reflecting this policy change will be available March 27, 2017 here.
The Internal Revenue Service (IRS) announced today that it will delay the date on which e-Services users will be required to re-register and validate their identities (previously discussed here). There is no new implementation date set. The IRS will need more time to discuss security protocols with "key stakeholders" in order to ensure a smooth transition. For more information on this change, click here: https://www.irs.gov/individuals/important-update-about-your-eservices-account.
The Treasury Inspector General for Tax Administration (TIGTA) completed its statutory audit of the IRS' Collection Due Process program and released its final report on August 30, 2016. The Collection Due Process program was designed as an opportunity for taxpayers to have an independent review of proposed IRS levies and liens. TIGTA found that the IRS' internal compliance with the program has improved overall, with fewer misclassified taxpayer cases as compared to the previous year's review.
On September 1, 2016, the Treasury Inspector General for Tax Administration (TIGTA) released its fiscal year 2016 statutory review of the Internal Revenue Service's compliance with the Freedom of Information Act (FOIA). The review found that taxpayer rights may have been violated in 11% of the IRS' responses, "because these information requests had some information erroneously withheld." In 16% of cases, the IRS took too long (more than 30 business days) to provide information requestors with a status update.
On July 8, 2016, Judge Mark V. Holmes issued an order in US Tax Court case Ernest S. Ryder & Associates, Inc., APLC, et al., v. Commissioner requiring the Internal Revenue Service (IRS) to notify the taxpayer of any and all subpoenas, with their responses and responsive documents, issued by the IRS to third parties. In this case, there were 77 such subpoenas issued and not yet disclosed, due to the absence of any direct requirement to do so within the Tax Court rules.
The California Franchise Tax Board (FTB) implemented a "no cash" policy in its field offices effective September 1, 2015. However, recognizing that this could create a hardship for some taxpayers, the FTB has established an exemption policy effective July 1, 2016. Taxpayers may sign a No Cash Policy Exemption Request form and submit it to the FTB with an explanation for their inability to pay using an alternative method. If accepted, exempt taxpayers will need to make an appointment at an FTB field office to pay in cash.
The Internal Revenue Service (IRS) has returned its Get Transcript Online tool back into service after disabling it in Spring 2015 due to security issues. With a "more rigorous e-authentication process" in place, all users can access copies of their tax transcripts and other tax-related information through the IRS' website once more. For taxpayers who find the new, two-step authentication process difficult, the IRS continues to offer more traditional ways to request and receive such data.
The California Franchise Tax Board (FTB) is experiencing a significant number of telephone calls, online chat queries, and in-person office visits related to withholding reports that were submitted late by taxpayers' employers. Taxpayers' returns were assessed and adjusted before the reports were received, leading to a high volume of complaints. The FTB has extended taxpayer response time to adjustment notices by two weeks and is re-valdiating affected returns.