For the IRS, like much of the country, it seems like the focus in recent weeks has been “All COVID, all the time.” The IRS is playing a central role in administering the Coronavirus Aid, Relief, and Economic Security (CARES) Act and other federal relief efforts, most notably by issuing Economic Impact Payments (EIPs) to more than 150 million individuals. The legal, technological, and practical challenges the agency is facing are enormous, and the IRS has moved rapidly, skillfully, and creatively to tackle these challenges, albeit hitting some processing bumps in the road.

Notwithstanding the IRS’s best intentions and efforts, taxpayers continue to face significant challenges. One month after the enactment of the CARES Act, the IRS has issued 122 million payments for a total of 207 billion dollars. However, some eligible individuals have not received the correct amounts, some deposits have been sent to discontinued or closed bank or financial accounts, and some mailing addresses will still need to be updated. Taxpayers have also complained about the IRS portal, “Get My Payment.” Nevertheless, more than 100 million people to date have successfully verified the status of their payments, and more than 8.9 million people have provided bank or financial account information to accelerate their receipt of payments. That is no small feat. The IRS continues to try to remedy any issues that arise, while keeping an eye on preventing fraud. Yet there are many tax issues unrelated to EIPs that taxpayers continue to struggle with as well.

In this blog, I will highlight several topics:
Read More

The health and safety of our employees, taxpayers and tax practitioners are the Taxpayer Advocate Service’s highest priorities. Despite the challenges presented by the National Emergency around the coronavirus (COVID-19), TAS is working hard to carry out its mission of helping taxpayers resolve their IRS tax problems and protecting taxpayer rights. While our taxpayers and employees are currently faced with uncertainty in their personal lives, we want to help ease the burden of unresolved tax matters and relieve hardships to the extent possible.

Just as others have needed to adjust how they presently conduct their work, so has the Taxpayer Advocate Service. Currently, TAS is operating in a virtual environment. We have suspended all face-to-face walk-in services until further notice, but TAS continues to serve taxpayers who need our help. We are virtually communicating with taxpayers by telephone, fax and mail as best as we can, given building closures and shelter-in-place limitations in parts of the country. Many of our employees, like their fellow citizens, are teleworking and are having to adjust to school closures, new care situations, and new work processes. We appreciate your patience and understanding as our employees strive to provide the best service possible as they adjust to these new work conditions.

Taxpayers who find themselves in hardship situations or with IRS tax problems they’ve been unable to resolve directly with the IRS may contact their local TAS office by phone. Telephone numbers to each of our offices can be found at taxpayeradocate.irs.gov/contact us. Currently, we are unable to answer calls to the IRS National Taxpayer Advocate’s Case Intake Line (877-777-4778), but again, we can be reached at the local phone numbers. Taxpayers may also visit our website for tax information on common issues and the latest developments regarding the coronavirus’s impacts to TAS’s operations.
Read More

The IRS uses certain “filters” to detect and prevent tax refund fraud. While these filters do stop a substantial amount of fraud, they also flag hundreds of thousands of returns each year that turn out to be legitimate. This causes refund delays and often creates financial hardships. Notably, the filters have produced a dramatic increase in the number of taxpayers seeking TAS assistance. TAS’s non-identity theft refund fraud case receipts have increased nearly five-fold over the past three years – from about 18,500 cases in calendar year (CY) 2017 to about 92,000 in CY 2019. Moreover, about 72 percent of the case receipts for CY 2019 were accepted under TAS’s “economic hardship” criteria. I wrote about this issue in a Most Serious Problem in my 2019 Annual Report to Congress.

Some background: The IRS’s Return Integrity Verification Operations (RIVO) function operates filters designed to identify suspected identity theft and other non-identify theft related instances of fraud. One of these filters is designed to identify cases where a taxpayer files a fraudulent return in his or her own name (e.g., the taxpayer claims his employer withheld $7,000 in federal tax when the employer only withheld $3,000, which, if not detected, would cause the taxpayer to receive a refund of $4,000 more than the correct amount). This non-identity theft filter is operated, in IRS parlance, by the “Pre-Refund Wage Verification Hold” (PRWVH) program.
Read More

The Taxpayer Advocate Service (TAS) is your voice at the IRS. We take this statement seriously, as demonstrated by the work we do to help taxpayers resolve their tax problems. We do more than resolve problems, however. Part of our mission is to recommend changes that will prevent problems in the future. And in keeping with that part of our mission, we provide oversight and support for the Taxpayer Advocacy Panel (TAP), a federal advisory committee made up of citizens that listens to taxpayers, identifies major taxpayer concerns, and makes recommendations for improving IRS customer service and customer satisfaction.

The panel, established in 2002, consists of about 75 volunteers. To the extent possible, TAP members come from all 50 states, the District of Columbia, and Puerto Rico. In addition, one member represents U.S. citizens working, living, or doing business abroad or in a U.S. territory other than Puerto Rico. To be a member of TAP, a person must be a U.S. citizen, be current with federal tax obligations, and pass a Federal Bureau of Investigation criminal background check. Members cannot be federally registered lobbyists. In addition, current Department of the Treasury and IRS employees cannot serve on the panel, and former Department of the Treasury or IRS employees and former TAP members must have a three-year separation from their service to be eligible for appointment. Tax practitioner applicants must be in good standing with the IRS (meaning not currently under suspension or disbarment).
Read More

During February, Taxpayer Advocates Service’s Local Taxpayer Advocates (LTAs) are in Washington, D.C., presenting the National Taxpayer Advocate’s 2019 Annual Report to Senators and House Members whose local offices they serve.

The law requires TAS to place at least one LTA in every state to assist taxpayers who are experiencing problems with the IRS. Over the past seven years, TAS has received an annual average of about 218,000 cases, and an annual average of about 15,000 of these cases (roughly seven percent), have been referred by congressional offices.

To facilitate coordination, TAS pairs every Senate and House office with an LTA office within the state the Senator or House member represents. LTAs work with congressional offices by sharing information about trends they are seeing in their casework and by partnering with them to disseminate information about filing deadlines, changes in the law, and other information that may be useful for taxpayers.

Once a year, typically around the first week of February, our Local Taxpayer Advocates go to Washington for our “Congressional Affairs Program.” During this “CAP” conference, they receive training on technical issues that they bring back to their local offices and teach to the case advocates they supervise, and they visit the Washington offices of the Senators and House members whose local offices they assist.
Read More

Many taxpayers work or engage in services that are considered to be a part of the gig or shared economy services. These services often originate through peer-to-peer interactions such as ride-share programs, room rentals, and other freelance work.

Following the May 2016 hearing, Taxpayer Advocate Service worked with the IRS to create the information contained on the pages listed below to help you navigate the tax responsibilities which may apply when you work in the gig economy environment.

IRS Sharing Economy Tax Center
Watch video from the May 2016 House Small Business Committee testimony on the Sharing Economy: A Taxing Experience for New Entrepreneurs, Part I and Part II.

Related Articles: Self Employment Taxes

TAS’s statutory mission is to resolve problems taxpayers encounter as a result of the way the IRS administers the nation’s tax code. In this blog, I would like to call attention to TAS’s efforts to correct an error in an IRS publication that may have led some taxpayers with a filing requirement to fail to file their returns.

Under section 6012(a) of the Internal Revenue Code (IRC), the filing threshold for married taxpayers filing separate returns from their spouses is the personal exemption amount, which was $4,050 in tax year (TY) 2017. In December 2017, the Tax Cuts and Jobs Act of 2017 (TCJA) suspended the personal exemption for TYs 2018-2025 (effectively reducing it to zero). As a result, taxpayers using this filing status face a filing requirement regardless of whether they worked or earned income in TYs 2018-2025. In light of Congressional intent underlying the TCJA, the IRS provided relief to married taxpayers filing separately by setting the filing requirement at $5. Both the IRS web site and the 2018 Instructions to Form 1040 indicate that a married filing separately taxpayer must file a tax return if the individual’s gross income is at least $5.

Read More