National Taxpayer Advocate files Annual Report – Damns IRS
THE National Taxpayer Advocate [of USA] filed the annual report in which it warned that increased demands on the IRS have eroded its ability to meet taxpayer service needs and expressed concern that the collection practices of IRS are harming financially struggling taxpayers without producing significant revenue gains.
The key issues that were identified for discussion in the annual report are as follows:
Customer Care: The report highlights the IRS's declining ability to answer telephone calls as the most serious problems facing taxpayers. In Financial Year 2010, it had set a target of answering only 71 percent of calls from the taxpayers seeking to speak with a customer service representative about their issues which was termed as unacceptable.
Collection Practices: The report contains a detailed assessment of IRS's examination and collection practices, concluding that many practices have been developed piecemeal and that the IRS lacks an effective overarching strategy to maximize voluntary compliance. The report also concludes that IRS collection practices often harm taxpayers without producing revenue.
Irregularity in Data reporting: The report expresses concern that the IRS does not maintain sufficient reliable data to assess the effectiveness of its collection practices in several respects. The report states that the quality of IRS's data reporting is uneven. The report states that there is an astonishing lack of transparency as to what is included in the revenue figures and how they are computed.
Tax Returns Processing: Under the current procedures, the IRS processes income tax returns before it processes most information returns. The report states that this makes little logical sense.
From the taxpayer's perspective, this sequence actually leads to millions of cases where taxpayers inadvertently make excess claims that the IRS does not identify until months later, exposing the taxpayer not only to a tax liability but to penalties and interest charges as well.
From the government's perspective, this sequence creates opportunities for fraud and requires the IRS to devote resources to recovering refunds that should not have been paid and that it often cannot recover.
This sequence also prevents the IRS from making pre-populated returns available as an option to taxpayers. The report recommends that legislative steps should be taken to allow the IRS to receive and process information reporting documents before it processes tax returns.
These are the excerpts of the annual report submitted by the National Taxpayer Advocate to the US Congress on the state of affairs in the IRS.
The Taxpayer Advocate Service (TAS) is an independent organization within the US IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels or who believe that an IRS system or procedure is not working as it should.
This is an annual exercise undertaken in the United States of America where the US Federal Law requires the National Taxpayer Advocate to submit an Annual Report to the US Congress each year identifying at least 20 of the most serious problems encountered by taxpayers and to make administrative and legislative recommendations to mitigate those problems.
Do you see any similarities of such an exercise undertaken in India? Yes, of course, but with an altogether different mandate under the Constitution of India. In fact, we have the Comptroller and Auditor General, a Constitutional Authority, who heads an organization which undertakes an arduous task of auditing the revenue receipts of the Government (both Union and States) and submits an annual report to the Parliament/State Legislatures with critical observations and recommendations on the corrective steps to be taken legislatively or administratively.
Shouldn't we also have something like the Taxpayer Advocate Service (TAS)?