Posted by Dennis Jao

Taxpayer Advocate Service

Taxpayer Advocate Service

Not many people know how the Taxpayer Advocate Service (TAS) works and what types of cases it handles. Some have indicated that they see the TAS as primarily concerned with low-income taxpayers' issues and not as a resource for issues affecting corporate taxpayers or high-income individuals. This article aims to eliminate this common misconception and advise how TAS can help with all taxpayers and issues.


About Taxpayer Advocate Service (TAS)

TAS is an independent IRS organization with offices in all states of the District of Columbia and Puerto Rico. It was originally established in 1979 as the taxpayer's attorney's office to act as the IRS chief taxpayer's advocate. The position was arranged into a systematic code in the Technical and Miscellaneous Revenue Act of 1988. The legal authority for the TAS is currently section 7803(C). 

The purpose of the TAS is to ensure that taxpayers are treated fairly and know and understand their rights. TAS is free, confidential, and designed to meet the needs of taxpayers. 

TAS works primarily in two ways: 

  1. Helping taxpayers with individual problems; and 

  2. Recommends systemic changes to IRS or tax laws. 

Exempt individuals, businesses, and organizations may be eligible for assistance in situations where an IRS issue is causing financial hardship, or an IRS process is not working properly. As noted on the TAS website, cases fall into four general categories:

  • If several different units and stages of the IRS are involved, the case needs a "coordinator" or "traffic cop" to ensure that everyone is doing their part. TAS plays this role.

  • When a taxpayer faces financial hardship, emergency, or hardship, the IRS must move much faster than normal (or even perhaps) in its normal procedures. In these cases, time is running out. If the IRS does not act quickly (for example, to remove a guarantee or issue a guarantee), the taxpayer will incur additional financial losses.

  • When the taxpayer presents unique facts or issues (including legal issues), and the IRS takes a "one-size-fits-all" approach, it fails to listen to the taxpayer and recognize that it needs new guidance in these circumstances.

  • When the taxpayer tried to resolve an issue through normal IRS channels, but those channels have broken down.

Some of these problems are described on the TAS website. The TAS also has the legal authority under Section 7811 to issue Tax Assistance Orders, which direct the appropriate IRS task force to act or stop in certain situations. The IRS working group can comply with the TAS or appeal. If disagreements persist, the matter could eventually reach the NTA and the Internal Revenue Commissioner.

In terms of systemic assistance, the TAS analyzes the taxpayer's work standards to determine if an IRS process or procedure is not functioning properly. In this case, TAS recommends steps to resolve the problem. The NTA submits an annual report to Congress that identifies at least twenty of the worst problems facing taxpayers. Taxpayers and professionals are encouraged to report system issues using IRS Systemic Advocacy Management Systems (SAMS). Low-income taxpayer clinics often use SAMS to highlight IRS procedural issues.

TAS is essential to the efficient and effective operation of the IRS. Through the efforts of the NTA, Congress passed the Taxpayers Bill of Rights (TBOR) in Section 7803 (a)(3) of the IRC. The taxpayer bill of rights, which contains ten fundamental rights for taxpayers, was a previous Tax Times article.


Using TAS outside of a low-income pro-bono context

As mentioned above, some people view TAS as a resource for low-income taxpayers and may not support corporate taxpayers or issues involving large sums of money. This misinterpretation can lead to a misunderstanding of how TAS can help in IRS litigation for specific clients or industry issues.

IRS rules of procedure and limited resources can sometimes cause problems. For example, taxpayers may file refund or rebate claims that aren't questionable but were withheld for some unknown reason without contacting the IRS. TAS can help in many of these situations to correct a problem promptly and to ensure that a corporate tax account is properly credited or that a refund is issued. This is just one instance of a situation where the TAS can help large taxpayers.

Another example of TAS assistance for corporate taxpayers is illustrated by the recent controversy surrounding the IRS administration's Section 965 transition fee. In this situation, the IRS has taken the position (which surprises many professionals and taxpayers) that for taxpayers who elect under section 965 to pay the transition tax for eight years in installments, 2017 tax overpayments cannot be used as credits for tax payments estimated for or refunded, unless and until the overpayment amount exceeds eight years of installments. 

Many tax professionals and organizations have engaged in discussions to persuade the IRS to reverse this position, which in some situations limits the ability of taxpayers to defer payment of the transition tax and, in turn, results in the creation of a single system for all prepayment to the IRS for which the taxpayer receives no credit for loss of interest or use of funds. To resolve this issue, consultations have been held with TAS.

Following these consultations, the TAS advocated a change in the IRS's position. In an August 16, 2018 blog post, NTA addressed the IRS's position in detail and explained why it should be changed. Whether the IRS will change course remains to be seen, but it is encouraging to see TAS tackle an issue that is seriously affecting taxpayers.

As demonstrated above, TAS is a resource for taxpayers of all shapes and sizes. Finding your local Tax Professional, like DENNIS JAO, and building relationships and connections with TAS can help tax clients with IRS disputes that cannot be resolved through normal administrative channels. In certain situations, the TAS may decide to issue a TAO or recommend actions related to a systemic problem. Through this process, taxpayers make sure the IRS hears their voices. In many situations, TAS involvement can resolve issues in a timely and efficient manner for taxpayers.


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