The Taxpayer Advocacy Panel:An Opportunity to Collaborate With the IRS

EXECUTIVE SUMMARY

The Taxpayer Advocacy Panel (TAP) of the IRS is another way CPAs can serve their clients and all taxpayers, by listening to their concerns and recommending improvements to the Service.

Some of the many measures the TAP has championed and seen adopted by the Service include the automatic six-month filing extension for income taxes and improvements to the Disaster Losses Kit of forms and publications needed by victims of disasters.

Although the TAP does not act on behalf of individual taxpayers and is limited to recommending changes that do not require legislative action, it can act as a conduit between taxpayers’ concerns and the IRS at a systemwide level.

The TAP is an arm of the National Taxpayer Advocate. Its activities are funded by the Taxpayer Advocate Service. It is organized into committees by issue or initiative, also a committee for each of seven national regions from which its members are drawn.

Membership is drawn from across the nation and Puerto Rico. Currently, 98 citizens serve as volunteers on the TAP, representing a range of occupations. They include, but are not limited to, CPAs and other tax professionals. They serve three years and commit 300 to 500 volunteer hours per year, including attending meetings and conducting grass-roots outreach to taxpayers.

Paul Shoemaker, CPA, Ph.D., is director of the School of Accountancy at the University of Nebraska– Lincoln and a member of the Taxpayer Advocacy Panel. His e-mail address is pshoemaker1@unl.edu.

Remember how you used to obtain an income tax return filing extension? You could file Form 4868 to receive another four months, and if that wasn’t enough, you could eke out another 60 days by filing Form 2688. Now, taxpayers may receive a six-month extension for individual returns by filing Form 4868. Form 2688 is no more.

What happened? The IRS acknowledged that one request for the full period was a reasonable measure of taxpayer relief. Of course, it didn’t make that decision in a vacuum. The Service heard taxpayers through the intercession of its own duly appointed volunteer liaison. That body is the Taxpayer Advocacy Panel, and the six-month automatic filing extension is only one of its many success stories.

Another instance occurred in Hurricane Katrina’s deadly wake. Many taxpayers lost their homes, businesses and possessions, including all their tax records and old returns. How did they begin to reconstruct information they needed not just to file their tax returns but even to calculate the magnitude of their losses? They could turn to Publication 2194, the Disaster Losses Kit, a collection of five IRS publications and schedules related to casualties, disasters and thefts (Publication 2194B for businesses). But among the many lessons learned from Katrina was that the kit could be improved by being expanded and consolidating in it information about the tax implications of presidentially declared disasters. The TAP’s recommendations in this regard improved the kit in preparation for the next hurricane, earthquake or other calamity.

Not that the TAP acts only in emergencies. Throughout the year, in issues great and small, it provides citizen input to the IRS regarding its service and customer satisfaction.

AN OPPORTUNITY TO SERVE
The TAP provides an alternative venue for CPAs to serve their clients. Familiarity with tax laws, forms, IRS publications, and taxpayer concerns makes CPAs ideal candidates to recommend improvements for taxpayer issues and to participate in focus groups. But membership in the TAP is not limited to tax professionals. It is broadly representative of a wide range of citizen volunteers who simply share a desire to serve publicly in a practical way, to help improve IRS services.

MORE SUCCESS STORIES
Besides six-month automatic extensions and improvements to the Disaster Losses Kit, the TAP has made many other successful recommendations to the IRS:

Small business reporting made easier. Until recently, Schedule C-EZ could be used by self-employed individuals whose maximum business expense deductions totaled no more than $2,500. The TAP recommended and the IRS agreed that this amount should be increased to $5,000. The higher limit enabled approximately 500,000 additional taxpayers to file the simplified income reporting form and reduced the aggregate tax preparation burden for taxpayers and staff by more than 5 million hours.

Helping older Americans understand tax issues. The IRS distributes a guide intended to address the issues of older Americans and their taxes this guide so that it is easier to read and more useful to the taxpayer. The IRS has agreed to enlarge the size of the type font used in the various tables and footnotes throughout the guide as well as print it on brighter paper to improve its readability.

Third-party designee. Upon IRS inquiry, taxpayers generally prefer the IRS to discuss their tax returns with the paid preparer who completed them. However, in the past this could not be done without the taxpayer formally granting power of attorney to the preparer. The TAP suggested that limited power of attorney be granted upon filing the tax return by completing the third-party designee information directly above the signature lines on Form 1040. This is a reasonable alternative that removes the burden of completing and filing Form 2848.

AN OPEN FORUM
Even when laws or technical difficulties prevent individual relief, the TAP provides a forum where taxpayer problems can be brought to light and possible solutions explored.

Imagine preparing your tax return and transposing two digits of your bank account number while entering the information for a direct deposit of your refund. After waiting several weeks, you check with the bank, but no deposit has been made to your account. After several more weeks you inquire with the IRS and are told your refund has been deposited to the account indicated on your tax return. Upon closer examination, you discover the error on your tax return. You inquire with the bank and are told that the erroneous account number is a valid account in the bank. However, because of privacy laws, the bank cannot divulge the account owner’s name but does tell you that the account has recently been closed. This true story involved nearly $3,500. The TAP considered possible solutions including verifying accounts before making direct deposits. Although such a process hasn’t yet been found to be feasible, at least the IRS is aware of the real possibility of such an error.

TO LISTEN AND RECOMMEND
The TAP was created in 2002 as an independent advisory group pursuant to the Federal Advisory Committee Act of 1972. Its mission is to listen to taxpayers, identify taxpayers’ issues and make recommendations for improving IRS service and customer satisfaction.

The TAP does not act on behalf of individual taxpayers or make recommendations that require legislative action. Rather, it solicits grass-roots issues from taxpayers and formulates recommendations to reduce taxpayer burdens and improve IRS services to taxpayers on a systemic level. It provides listening opportunities for independent taxpayer comments and suggestions regarding IRS service and customer satisfaction. Each identified tax issue is researched (if necessary) and is reviewed by two committees. The issues with highest merit for substantive change are elevated to the IRS. The IRS may accept the recommendations and implement corresponding changes or dismiss them. In any event, the IRS provides written responses for all elevated recommendations.

The TAP is one arm of the National Taxpayer Advocate, currently Nina Olson, who is an IRS official but independent of IRS operations. She reports directly to the commissioner of the IRS and the Treasury secretary.

The National Taxpayer Advocate also administers the Taxpayer Advocate Service (TAS), which includes Local Taxpayer Advocates at the state level (at least one in each state). TAP activities are funded by the Taxpayer Advocate Service, which provides technical, administrative and clerical support.

A DEMOGRAPHIC CROSS-SECTION
There are currently 98 demographically diverse citizen volunteers on the TAP representing every state, the District of Columbia and Puerto Rico. Some members are CPAs or work in tax-related professions, but they generally reflect a cross-section of America. Factory workers, physicians, professors, entrepreneurs, social workers, military personnel, state government employees and retirees from various occupations are all represented on the panel.

The TAP conducts its activities through two types of grass-roots committees, area committees and issue committees, and one oversight committee, the Joint Committee. The area committees are aligned with the seven Taxpayer Advocacy Service regions of the country and focus on issues raised by citizens in their communities.

Seven issue committees partner with the IRS to focus on national initiatives or issues that cut across geographic boundaries. They are:

Tax Forms and Publications

Small Business/Self-Employed Burden Reduction

Earned Income Tax Credit

Notice Improvement

Taxpayer Assistance Centers

Volunteer Income Tax Assistance (VITA)

Communications

The Joint Committee is the TAP’s executive branch. Members of this committee are the TAP chair and vice chair, the area and issue committee chairs and the TAP director, a TAS employee. The Joint Committee considers issues elevated by the area and issue committees and decides which issues to elevate to the IRS for formal consideration. In the five years from the TAP’s inception through Dec. 31, 2007, the Joint Committee elevated 305 recommendations to the IRS, including 57 new recommendations during 2007. The IRS may accept, partially accept, or reject the recommendations. For the 2007 Annual Report, including recommendations and their disposition or status, see www.improveirs.org/annualreports/2007AnnualReport.pdf.

EXPECTATIONS OF PANEL MEMBERS
TAP members have three-year terms and a commitment to volunteer 300 to 500 hours per year. Service includes monthly one-hour conference calls for each committee affiliation, with additional calls for subcommittees; one annual, two-day, face-to-face meeting for each committee; a four-day annual meeting of all TAP members; and individual outreach.

Each member is assigned to an area committee based on residence and to an issue committee. Issue committee assignments are made according to member interests as much as possible. The committees serve as venues to bring general taxpayer issues (area committees) and topical issues (issue committees) to the table for discussion. Issues are researched, sorted and prioritized before deciding which to elevate to the Joint Committee. The face-to-face meetings allow for focused and concentrated work on issues.

All TAP members are expected to contribute to the panel’s central mission through outreach. Each member sets a personal agenda to spread the word about the TAP and listen to taxpayer concerns. This can be done by speaking to church groups, Rotary clubs, other civic groups and town hall meetings; partnering with Local Taxpayer Advocates at meetings; or talking one-on-one with individuals. These contacts generate the issues that begin the recommendation cycle for improvements to IRS service and customer satisfaction.

WHO MAY SERVE?
Though panel members are from all walks of life, many current members are CPAs and/or work in tax-related fields. There are also quite a few older/retiree members. To be eligible for service, a volunteer must be a U.S. citizen, be current with all federal tax obligations and not have a criminal background. The annual recruitment period is during March and April. Interested individuals may visit the TAP Web site to apply (www.improveirs.org) during this period.

GIVING BACK
Serving on the TAP is one way to represent your community in a national forum. You don’t have to be a member of the TAP to start a recommendation, however. If you would like to contact the TAP to make a tax issue or concern known, you have several points of contact. You may go to the TAP Web site (www.improveirs.org) and type an entry. Look for the “comments and suggestions” link on the home page. You also may call the TAP at 888-912-1227. Alternatively, you may contact the TAP representative in your area. A roster of TAP members and their geographic areas is listed on the TAP Web site.

AICPA RESOURCES

AICPA Tax Membership Section
Tools, technologies and peer interaction for CPAs with tax practices. The Section keeps members up to date on tax legislative and regulatory developments. Visit the AICPA Tax Center at http://tax.aicpa.org.

OTHER RESOURCE

Web Site
IRS Taxpayer Advocacy Panel, www.improveirs.org