Monday, April 27, 2015

National Taxpayer Advocate Provides Insight to IRS Challenges

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In early March, government representatives and industry experts came together in Washington, D.C., to provide insight into the latest developments affecting the payroll profession at the APA's Capital Summit. Nina Olson, the National Taxpayer Advocate, was on hand to provide an inside view of some of the challenges facing the IRS, including reduced levels of taxpayer services and recent legislation concerning payroll service provider fraud.

Olson said the taxpayer services portion of the IRS budget remained close to last year’s level. To highlight the seriousness of this situation, she compared the current level of taxpayer service to 1998, which led to the passage of the IRS Restructuring and Reform Act. Olson stated that, “In February, IRS personnel answered an average of 31% of taxpayer phone calls.”

Olson also explained that the reduction in taxpayer services will impact both taxpayer compliance and IRS enforcement. In some cases, a taxpayer who is unable to contact the IRS for help with completing a return may not even speak to an IRS representative before an audit has started.

Olson also spoke to Capital Summit attendees about recent legislation passed to combat payroll service provider fraud. The Taxpayer Advocate Service (TAS) has urged Congress to address payroll service provider fraud and provide relief to its victims. Some of the TAS concerns were addressed in legislation passed in 2014 requiring the IRS to issue dual change of address notifications to PSP clients. Dual notices alert the PSP’s client that something may be wrong, allowing the client to catch fraudulent activity earlier. Without dual notices, fraudsters have been able to direct IRS correspondence to their own address. This has prevented taxpayers from learning of the missing tax deposits in a timely manner, thereby extending the period of fraudulent activity. Olson said the IRS “finally” started issuing dual notices on January 23, 2015.

Read the April issue of Payroll Currently for more information on Olson's report and a full Capital Summit recap.