National Taxpayer Advocate Releases 2012 Annual Report to Congress

In her 2012 Annual Report to Congress, National Taxpayer Advocate Nina Olson identifies 23 of the most serious problems facing American taxpayers. Top among her list is the complexity of the tax laws.

The top 23 most serious problems identified by the Taxpayer Advocate are:

1. The Complexity of the Tax Code
2. The Alternative Minimum Tax Corrodes Both the Tax System and the Democratic Process
3. The IRS Is Significantly Underfunded to Serve Taxpayers and Collect Tax
4. The IRS Has Failed to Provide Effective and Timely Assistance to Victims of Identity Theft
5. The IRS Harms Victims of Return Preparer Misconduct by Failing to Resolve Their Accounts Fully
6. Despite Some Improvements, the IRS Continues to Harm Taxpayers by Unreasonably Delaying the Processing of Valid Refund Claims that Happen to Trigger Systemic Filters
7. The IRS's Compliance Strategy for the Expanded Adoption Credit Has Resulted in Excessive Delays to Taxpayers, Has Increased Costs for the IRS, and Does Not Bode Well for Future Credit Administration
8. The IRS Offshore Voluntary Disclosure Programs Discourage Voluntary Compliance by Those who Inadvertently Failed to Report Foreign Accounts
9. The IRS's Handling of ITIN Applications Imposes an Onerous Burden on ITIN Applicants, Discourages Compliance, and Negatively Affects the IRS's Ability to Detect and Deter Fraud
10. The Preservation of Fundamental Taxpayer Rights Is Critical as the IRS Develops a Real-Time Tax System
11. Overextended IRS Resources and IRS Errors in the Automatic Revocation and Reinstatement Process Are Burdening Tax-Exempt Organizations
12. The IRS Telephone and Correspondence Services Have Deteriorated Over the Last Decade and Must Improve to Meet Taxpayer Needs
13. The IRS Has Failed to Make Free Return Preparation and Free Electronic Filing Available to All Individual Taxpayers
14. The IRS Is Striving to Meet Taxpayers' Increasing Demand for Online Services, Yet More Needs To Be Done
15. Challenges Persist for International Taxpayers as the IRS Moves Slowly to Address Their Needs
16. IRS Processing Flaws and Service Delays Continue to Undermine Fundamental Taxpayer Rights to Representation
17. The IRS Lacks a Servicewide Strategy that Identifies Effective and Efficient Means of Delivering Face-To-Face Taxpayer Services
18. The IRS Is Substantially Reducing Both the Amount and Scope of its Direct Education and Outreach to Taxpayers and Does Not Measure the Effectiveness of its Remaining Outreach Activities, Thereby Risking Increased Noncompliance
19. A Proactive Approach To Developing a Government Issued Debit Card to Receive Tax Refunds Will Benefit Unbanked Taxpayers
20. The Diminishing Role of the Revenue Officer Has Been Detrimental to the Overall Effectiveness of IRS Collection Operations
21. The Automated Collection System Must Emphasize Taxpayer Service Initiatives to Resolve Collection Workload More Effectively
22. Although the IRS "Fresh Start" Initiative Has Reduced The Number of Liens Filed, the IRS Has Failed To Determine Whether its Lien-Filing Policies Are Clearly Supported by Increases in Revenue and Taxpayer Compliance
23. Early Intervention, Offers in Compromise, and Proactive Outreach Can Help Victims of Failed Payroll Service Providers and Increase Employment Tax Compliance

Document resources:

• National Taxpayer Advocate: 2012 Annual Report micro-site
• Internal Revenue Service: National Taxpayer Advocate Delivers Annual Report to Congress; Focuses on Tax Reform, IRS Funding and Identity Theft (IR-2013-3)

From Around the Web:

• Kay Bell: Top taxpayer problem? Continuing tax code complexity; and Remaining taxpayer problems in 2012
• Robert Flach: Taxpayer Advocate Delivers Annual Report to Congress; and Nina Olsen on the Dreaded AMT
• Kelly Phillips Erb: Tax Code Hits Nearly 4 Million Words, Taxpayer Advocate Calls It Too Complicated