National Taxpayer Advocate Nina E. Olson today released her 2014 annual report to Congress, which expresses concern that taxpayers this year are likely to receive the worst levels of taxpayer service since at least 2001 when the IRS implemented its current performance measures.<\/p>\n
Federal law requires the Annual Report to Congress to identify at least 20 of the \u201cmost serious problems\u201d encountered by taxpayers and to make administrative and legislative recommendations to mitigate those problems.\u00a0 Overall, this year\u2019s report identifies 23 problems, makes dozens of recommendations for administrative change, makes 19 recommendations for legislative change, and analyzes the 10 tax issues most frequently litigated in the federal courts.<\/p>\n
Among the \u201cmost serious problems” addressed is the Offshore Voluntary Disclosure (OVD) Program Inequities.\u00a0 The report describes the evolution of the OVD program and the disproportionate penalties it says were often imposed, particularly with respect to unrepresented taxpayers.\u00a0 The IRS changed the streamlined program in 2014 in ways that allow many taxpayers to pay lower penalties.\u00a0 However, the new rules do not allow taxpayers who already had entered into closing agreements with the IRS at higher penalty rates to amend those agreements.\u00a0 Therefore, taxpayers who are the most deserving of leniency because they were the first to acknowledge they had failed to comply with foreign account reporting requirements ultimately are paying substantially greater penalties than taxpayers who waited until later to acknowledge their noncompliance.\u00a0 Among other things, the report recommends that the IRS revisit this decision.<\/p>\n