National Taxpayer Advocate Nina E. Olson has released her 2006 Annual Report to Congress, which lists (as required by § 7803(c)(2)(B)(ii)(III)) the twenty most serious problems encountered by taxpayers. Here are the Top 5:
- AMT for Individuals
- Tax Gap
- Transparency of the IRS
- True Costs and benefits of Private Debt Collection
- Early Intervention in IRS Collection Cases
As explained in more detail below the fold, the report calls on Congress to repeal the IRS’s authority to outsource tax collections.
- 2006 Annual Report to Congress:
- Vol. 1, § 1: Preface, Table of Contents, and The Most Serious Problems Encountered By Taxpayers, and Status Update on the Questionable Refund Program
- Vol. 1, § 2: Key Legislative Recommendations and Additional Legislative Recommendations
- Vol. 1, § 3: The Most Litigated Issues
- Vol. 1, § 4: Case & Systemic Advocacy
- Vol. 1, § 5: Appendices
- Vol. 2: Study of Taxpayer Needs, Preferences, and Willingness to Use IRS Services and Downstream Impact Project: Identifying Drivers of TAS Workload
- Executive Summary
- Press Release (IR-2007-04)
Press coverage:
The report raises numerous concerns about the outsourcing of tax collection that began in September 2006. The report notes that one of the premises on which the program was based was a “level playing field” — meaning that rules that apply to the IRS and IRS employees would also apply to private collection agencies (PCAs) and PCA employees. In practice, the program has deviated from this “level playing field,” Olson said. For example, the report notes the procedures that IRS employees follow when collecting tax debts are set forth in the Internal Revenue Manual and are available to the public. By contrast, PCAs maintain operational plans and calling scripts that describe such things as psychological techniques to coax debtors into paying, and these scripts are considered “proprietary information” that Olson’s office was not permitted to disclose. The report’s analysis of the costs and benefits of the private debt collection initiative leads Olson to conclude that the revenue benefits of the program are limited and the potential for taxpayer rights violations is significant. She recommends that Congress repeal the IRS’s authority to outsource tax collection.
