THE ROLE OF TAXPAYER ADVOCATES AND
OMBUDS IN PROMOTING PROCEDURAL
JUSTICE AND TAX MORALE
International Conference on Taxpayer Rights
November 2015
Procedural Justice
“Procedural justice includes two issues:
• fair decision making (voice, neutrality)
– i.e., participatory, neutral, transparent, rule based;
consistent decision-making -• fair interpersonal treatment (treatment with dignity/respect;
trust in authorities)
– i.e., treatment involving respect for people; respect for
their rights; treatment with dignity and courtesy; care and
concern from authorities.
• Such issues can be considered at the institutional level and/or
in terms of the actions of particular individuals.”
--- Tom Tyler, Legitimacy and Criminal Justice: The benefits of
self-regulation (2009)
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Tax Morale
• “If people hate taxes so much why do they pay them? The
common, seemingly obvious, answer – fear of being caught
cheating – is only a partial answer. . . .The key to this puzzle
is ‘tax morale,’ the collective name for all the non-rational
factors and motivations – such as social norms, personal
values and various cognitive processes – that strongly affect
an individual’s voluntary compliance with laws. Higher tax
morale correlates with higher tax compliance.”
--Marjorie E. Kornhauser, Normative and Cognitive Aspects of
Tax Compliance: Literature Review and Recommendations for
the IRS Regarding Individual Taxpayers (2007).
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Office of the Taxpayer Advocate
• Internal Revenue Code § 7803(c) describes the mission and
duties of the office:
• Assist taxpayers in resolving problems with the Internal
Revenue Service (IRS);
• Identify areas in which taxpayers have problems in dealings
with the IRS;
• To the extent possible, propose changes in the administrative
practices of the IRS to mitigate problems identified; and
• Identify potential legislative changes which may be
appropriate to mitigate such problems.
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How does TAS accomplish its mission?
• Case Advocacy: 78 Local Taxpayer Advocate
offices advocate with respect to specific taxpayer
cases; by statute, at least one must be located in
each state; includes Technical Advisors as subject
matter experts.
• Systemic Advocacy: Analysts identify, analyze,
and advocate with respect to systemic taxpayer
problems; participate in IRS teams; review IRS
guidance to employees.
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How does TAS accomplish its mission?
• Research Function: Conducts applied research
studies and reviews all data cited in NTA Reports
to Congress and testimony; provides analyses for
TAS business operations.
• Attorney-Advisors: Support the NTA in all her
duties, especially the Annual Reports to Congress
and review and comments on Regulations.
• Headquarters: Includes Business Modernization
(IT), Finance, Training, Business Analytics.
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Basic TAS Demographics
• 1,900 Employees, including 800 Case Advocates
• TAS cases involve all types of issues: Audit, Assessment,
Collection, Processing Problems, Taxpayer Rights.
• FY 2015: 227,189 cases received by TAS case advocacy.
• FY 2015 cases closed: 78.4% relief rate.
• TAS has over 100 different issue codes for categorizing
cases: In FY 15, 61% of cases involved more than 1
issue, 18% involve 2 or more issues
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Types of TAS Cases
Total Receipts
Top Ten Primary Issues (FY 2015)
FY 2015
FY 2014
Economic Burden Receipts
% Change
FY 2015
FY 2014
%
Change
Identity Theft
56,174
43,690
28.6%
40,284
31,160
29.3%
Pre-Refund Wage Verification Hold
40,633
35,220
15.4%
25,206
20,917
20.5%
Processing Amended Return
11,847
10,245
15.6%
5,331
4,713
13.1%
Earned Income Tax Credit (EITC)
10,880
13,450
-19.1%
8,545
10,519
-18.8%
Levies
7,977
8,086
-1.3%
7,074
7,206
-1.8%
Processing Original Return
7,148
7,664
-6.7%
4,479
4,669
-4.1%
Reconsideration/SFR/6020B/Audit
6,723
6,768
-0.7%
2,310
2,388
-3.3%
Unpostable/Reject
6,057
3,751
61.5%
4,954
2,829
75.1%
Returned/Stopped Refunds
4,612
3,271
41.0%
2,517
1,559
61.4%
7,284
139,429
-36.8%
3,746
6,104
-38.6%
Top Ten Receipts:
4,604
156,655
12.4%
104,446
92,064
13.4%
All other Receipts:
70,534
77,268
-8.7%
31,023
32,668
-5.0%
Total Receipts:
227,189
216,697
4.8%
135,469
124,732
8.6%
Injured Spouse Claim
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Types of FY 15 TAS Cases
• 59% (133,313) involved Wage & Investment
taxpayers
• 40% (91,183) involved Small Business/SelfEmployed Taxpayers
• 1% (2,269) involved Tax Exempt/Government
Entities Taxpayers
• < 1% (747) involved Large Business/International
Taxpayers
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Additional Demographics
• Since it stood up in 2000, TAS has assisted
about 3.7 million taxpayers in resolving their
problems with the IRS.
• That is a lot of taxpayers!
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The Right to a Fair and Just Tax System
• Taxpayers have the right to expect the tax system
to consider facts and circumstances that might
affect their underlying liabilities, ability to pay, or
ability to provide information timely.
• Taxpayers have the right to receive assistance
from the Taxpayer Advocate Service if they are
experiencing financial difficulty or if the IRS has
not resolved their tax issues properly and timely
through its normal channels.
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Key Attributes of an Effective
Taxpayer Advocate/Ombuds
• Independence
• Transparency
• Question: How to achieve this while maintaining
open communication with the tax agency?
• Question: How to gain and keep taxpayer trust if
advocate/ombuds is within the tax agency?
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Independence
• Appointment Authority of National Taxpayer Advocate
-- IRC 7803(c)(1)(B)(ii)
• Career Path Limitations -- IRC 7803(c)(1)(B)(iv)
• Mandatory Statement of Independence -- IRC
7803(c)(4)(A)(iii)
• Confidentiality -- IRC 7803(c)(4)(A)(iv)
• Independent Communications -- IRC 7803(c)(4)(B)
• Taxpayer Assistance Order (TAO) -- IRC § 7811
• Taxpayer Advocate Directive (TAD) -- Del. Order 13-3
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Mandatory Statement of Independence
• Each local taxpayer advocate shall, at the
initial meeting with any taxpayer seeking the
assistance of a local office of the taxpayer
advocate, notify such taxpayer that the
taxpayer advocate offices operate
independently of any other IRS office and
report directly to Congress through the
National Taxpayer Advocate. IRC
7803(c)(4)(A)(iii).
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Confidentiality
• Each local taxpayer advocate may, at the
taxpayer advocate’s discretion, not disclose to
the IRS contact with, or information provided
by, such taxpayer. IRC 7803(c)(4)(A)(iv).
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Communications
• Each local office of the taxpayer advocate shall
maintain a separate phone, facsimile, and
other electronic communication access, and a
separate post office address. IRC
7803(c)(4)(B).
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Taxpayer Assistance Order (TAO)
• Issued by the National Taxpayer Advocate (and
her delegates) where the taxpayer is suffering or
about to suffer a significant hardship as a result
of the manner in which the internal revenue laws
are being administered by the Secretary. IRC
7811(a)(1).
• Significant Hardship = economic burden; systemic
burden; impairment of rights; serious privation
(more than mere economic or personal
inconvenience). (IRC 7811(a)(2) and Treas. Reg. §
301.7811-1(a)(4)(ii).
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Taxpayer Assistance Order
May require the Secretary of the Treasury within a
specified time period to:
(1) to release property of the taxpayer levied upon, or
(2) to cease any action, take any action as permitted by
law, or refrain from taking any action, with respect to the
taxpayer [with respect to collection, bankruptcy and
receiverships, discovery of liability and enforcement of
title,] or any other provision of law which is specifically
described by the National Taxpayer Advocate in such
order. IRC 7811(b)(1) and (2).
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Taxpayer Assistance Order
Any TAO issued by the NTA may be modified or
rescinded –
(1) only by the NTA, the Commissioner of
Internal Revenue, or the Deputy
Commissioner of Internal Revenue, and
(2) only if a written explanation of the reasons
for the modification or rescission is provided
to the NTA. IRC 7811(c).
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Taxpayer Assistance Order
BUT, in her Annual Report to Congress, the NTA
must:
“Identify any Taxpayer Assistance Order
which was not honored by the Internal
Revenue Service in a timely manner . . . .”
IRC 7803(c)(2)(B)(ii)(VII).
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Taxpayer Advocate Directive (TAD)
• A TAD may be issued to
(1) mandate administrative or procedural changes to improve
the operation of a functional process, or
(2) grant relief to groups of taxpayers (or all taxpayers) when
its implementation will protect the rights of taxpayers,
prevent undue burden, ensure equitable treatment, or
provide an essential service to taxpayers.
Delegation Order 13-3 (formerly DO-250, Rev. 1), Authority to Issue Taxpayer Advocate
Directives (Jan. 17, 2001). See also IRM 13.2.1.6, Taxpayer Advocate Directives (July 16,
2009).
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Transparency
• Annual Reports to Congress:
(1) Objectives Report to Congress: delivered by
June 30 of each year, NTA reports on objectives of
her office for the upcoming fiscal year, including
“full and substantive analysis, in addition to
statistical information.”
(2) Annual Report to Congress: delivered by
December 31 of each year, NTA reports on the
activities of her office during the past fiscal year.
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Transparency
• Interaction with Independence:
“Each report . . . Shall be provided directly to the
[Committee on Ways and Means of the House of
Representatives and the Committee on Finance
of the Senate] without any prior review or
comment from the Commissioner, the Secretary
of the Treasury, the Oversight Board, any other
officer or employee of the Department of the
Treasury, or the Office of Management or
Budget.” IRC 7803(c)(2)(B)(iii).
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Objectives Report
• Filing Season Analysis
• Areas of Focus for upcoming fiscal year (i.e.,
systemic issues)
• TAS operational focus for upcoming fiscal year
• IRS responses to prior year’s Annual Report
administrative recommendations.
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Annual Report to Congress
• Most Serious Problems: “a summary of the
most serious problems encountered by
taxpayers, including a description of the
nature of such problems” along with
“recommendations . . . as may be appropriate
to resolve problems encountered by
taxpayers.” IRC 7803(c)(2)(B)(ii)(III) and (VIII).
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Annual Report to Congress
• Legislative Recommendations “as may be
appropriate to resolve problems encountered
by taxpayers.” IRC 7803(c)(2)(B)(ii)(VIII); and
• Identify areas of the tax law that impose
significant compliance burdens on taxpayers
or the IRS, including specific
recommendations for remedying these
problems. IRC 7803(c)(2)(B)(ii)(IX).
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Annual Report to Congress
• Most Litigated Issues: “identify the 10 most
litigated issues for each category of taxpayers,
including recommendations for mitigating
such disputes.” IRC 7803(c)(2)(B)(ii)(X)
• And …. “Include such other information as the
National Taxpayer Advocate may deem
advisable.” IRC 7803(c)(2)(B)(ii)(XI). [The
NTA’s favorite provision!]
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Tax Administration Impact of Taxpayer Advocate
Independency and Transparency
• Since 2000, TAS has assisted in approximately
1.4 million cases involving taxpayers
experiencing economic burden.
• Since 2000, TAS has issued 2000 Taxpayer
Assistance Orders (and threatened to issue
many, many more).
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Tax Administration Impact of Taxpayer Advocate
Independency and Transparency
• Since 2001, TAS has made 1,351 administrative
recommendations in its Annual Report to
Congress.
• Most recently the IRS agreed to 48 % of the
administrative recommendations made in the
2014 Annual Report to Congress.
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Tax Administration Impact of Taxpayer Advocate
Independency and Transparency
• Since 2001, TAS has made 166 Legislative
Recommendations, 24 of which Congress or
the IRS (through regulations) has adopted.
Congress has introduced over 250 bills
proposing enactment of the NTA’s legislative
recommendations.
• The NTA has testified before Congress more
than 60 times, addressing taxpayer concerns.
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TAS Promotes Taxpayer Trust
• TAS ensures not only that taxpayers can present
their case to the IRS but that the IRS listens to the
taxpayers (the right to challenge the IRS and be
heard) and provides explanations for its actions
(the right to be informed).
• Through the Low Income Taxpayer Clinic Grant
program, TAS ensures that taxpayers have access
to legal representation regardless of income level
(the right to retain representation).
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TAS Promotes Taxpayer Trust
• About 48% of TAS taxpayers who received
relief in their TAS cases felt more positive
about the IRS as a result of their interaction
with TAS.
• About 36% of TAS taxpayers who did not
receive relief in their TAS cases still felt more
positive about the IRS as a result of their
interaction with TAS.
[TAS Customer Satisfaction Surveys, through 3rd quarter FY
2015.]
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TAS and Taxpayer Compliance
• TAS Research is currently studying the
relationship between TAS assistance and
future compliance of the taxpayers TAS assists.
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Challenges
• Independent Counsel
• Independent Budget/Appropriations
• Amicus Brief Authority
• Agency acknowledgement and acceptance of TAS
Role (see August 2013 NTA Report to Acting
Commissioner)
• Managing conflict/adversarial relations between
TAS and IRS – are they avoidable?
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TAS Promotes Taxpayer Trust
• TAS casework serves as a check on the
coercive power of the tax agency.
• The taxpayer can have some expectation that
if he makes a mistake or experiences some
kind of hardship, there is an entity that can
ensure the government takes into
consideration those specific circumstances.
(The right to a fair and just tax system.)
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