The Taxpayer Advocate Service (TAS) is an independent organization within the Internal Revenue Service (IRS) that helps taxpayers resolve problems with the IRS and recommends changes to prevent future issues. It is a critical component of federal tax law and administration, ensuring that individual and business taxpayers are treated fairly and understand their taxpayer rights. The Taxpayer Advocate Service acts as an independent voice for taxpayers, working to resolve complex tax issues that individuals and businesses have not been able to resolve through traditional IRS channels.24
History and Origin
The Taxpayer Advocate Service evolved from earlier IRS programs designed to address taxpayer issues, notably the Problem Resolution Program established in 1977.23 However, its independence and expanded authority were significantly formalized with the passage of the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 98).21, 22 This landmark legislation mandated a National Taxpayer Advocate and local taxpayer advocates in each state, tasked with assisting taxpayers and proposing administrative and legislative changes to mitigate taxpayer problems.19, 20 This act underscored the need for an independent body within the Internal Revenue Service to safeguard taxpayer interests and enhance public trust in tax administration.18
Key Takeaways
- The Taxpayer Advocate Service is an independent organization within the IRS, established to protect taxpayer rights and resolve tax issues.17
- It assists taxpayers experiencing financial hardship, delays, or issues not resolved through normal IRS channels.
- TAS works to identify and propose changes to the tax system to prevent recurring problems for taxpayers.15, 16
- A key power of the Taxpayer Advocate Service is the ability to issue a Taxpayer Assistance Order (TAO), compelling the IRS to take or refrain from certain actions.14
Interpreting the Taxpayer Advocate Service
The Taxpayer Advocate Service serves as a crucial resource when taxpayers encounter difficulties with the IRS that they cannot resolve on their own. This can include situations where IRS actions are causing significant financial hardship, taxpayers face an immediate threat of adverse action (such as a lien or levy), or there have been unreasonable delays in resolving a tax matter. The existence of the Taxpayer Advocate Service reinforces the principle of due process in tax administration, providing an avenue for recourse and ensuring that the IRS adheres to taxpayer rights.
Hypothetical Example
Consider Jane, a small business owner who filed her tax return and is now facing an unexpected tax audit. During the audit, the IRS requests extensive documentation and proposes a significant increase in her tax liability based on an interpretation of the tax code that Jane believes is incorrect. Despite her best efforts to communicate with the assigned IRS agent and provide clarifying information, the issue remains unresolved, and she is threatened with collection action, which would severely impact her business.
At this point, Jane contacts the Taxpayer Advocate Service. A TAS case advocate reviews her situation, determines that Jane meets the criteria for assistance due to potential financial hardship and unresolved issues, and intervenes on her behalf. The advocate works with the IRS to re-evaluate the audit findings, facilitates communication, and ensures Jane's position is adequately considered, ultimately helping to achieve a fair tax resolution that she could not achieve alone.
Practical Applications
The Taxpayer Advocate Service plays a vital role in various real-world scenarios within tax administration and financial planning. Its applications include:
- Resolving Complex Disputes: When a taxpayer has exhausted normal IRS channels for resolving an issue, such as an unresolved audit dispute, a problem with an Offer in Compromise, or issues related to the statute of limitations.
- Preventing Financial Hardship: Intervening when IRS collection actions, such as wage garnishments or property seizures, would cause significant economic harm to a taxpayer.
- Addressing Systemic Issues: The National Taxpayer Advocate, who leads the Taxpayer Advocate Service, identifies common problems encountered by taxpayers and proposes administrative or legislative changes to the IRS and Congress to prevent these issues from affecting others.13 For example, the Taxpayer Advocate Service has consistently highlighted issues related to IRS backlogs in processing returns and correspondence, advocating for improvements in efficiency and taxpayer service.11, 12 A 2007 Government Accountability Office (GAO) report noted that while the Taxpayer Advocate Service's caseload had grown and taxpayers reported satisfaction, additional measures of efficiency and effectiveness were needed.10 More recent GAO reports continue to highlight challenges like staffing and the complexity of tax laws affecting the taxpayer experience.9
Limitations and Criticisms
While the Taxpayer Advocate Service is designed to be an independent voice for taxpayers, it does face certain limitations and criticisms. One challenge can be the sheer volume and complexity of cases, which may strain resources and lead to delays, despite the service's efforts to streamline operations. Although TAS is independent within the IRS, it still operates within the broader framework of the tax agency, which some argue can present perceived or actual limitations on its ability to fully challenge IRS decisions or policies.
Moreover, the effectiveness of the Taxpayer Advocate Service can be impacted by factors such as IRS budget constraints, staffing levels, and the overall volume of unprocessed tax compliance actions. For instance, the National Taxpayer Advocate has frequently reported on the IRS's struggles with backlogs, which can impede TAS's ability to achieve timely resolutions for taxpayers.7, 8 Despite efforts to improve, challenges remain in fully resolving taxpayer issues in a timely manner, especially with correspondence and amended returns.6
Taxpayer Advocate Service vs. IRS Independent Office of Appeals
The Taxpayer Advocate Service (TAS) and the IRS Independent Office of Appeals are distinct entities, though both play roles in resolving taxpayer disputes. The primary difference lies in their function and relationship to the taxpayer.
The Taxpayer Advocate Service acts as an ombudsman, an independent advocate for taxpayers within the IRS. Its role is to help taxpayers navigate and resolve problems they haven't been able to fix through regular IRS channels, often when facing significant hardship. TAS focuses on protecting taxpayer rights and identifying systemic issues within the tax system.
In contrast, the Appeals process is an administrative recourse within the IRS where taxpayers can formally dispute proposed tax adjustments or collection actions. The Independent Office of Appeals functions as an impartial arbiter, aiming to resolve tax controversies without litigation based on the merits of the case and applicable tax law. While Appeals considers the facts and law, TAS focuses on the taxpayer's individual circumstances, particularly hardship, and ensures fair treatment and adherence to taxpayer rights.
FAQs
Who is eligible for assistance from the Taxpayer Advocate Service?
The Taxpayer Advocate Service can assist taxpayers who are experiencing significant financial hardship as a result of an IRS issue, or who have not received a response or resolution from the IRS by a promised date, or where an IRS system or procedure is not working as it should.
What kind of problems can the Taxpayer Advocate Service help with?
The Taxpayer Advocate Service can help with a variety of issues, including prolonged refund delays, erroneous IRS notices, challenges with tax audit outcomes, difficulties in setting up payment arrangements, and issues related to identity theft.4, 5
Is the Taxpayer Advocate Service part of the IRS?
Yes, the Taxpayer Advocate Service is an independent organization within the Internal Revenue Service, ensuring its ability to operate independently and advocate for taxpayers without undue influence from other IRS departments.3
Does the Taxpayer Advocate Service provide legal advice?
The Taxpayer Advocate Service does not provide legal advice or tax preparation services. Instead, their advocates work to resolve administrative problems between taxpayers and the IRS and ensure that taxpayers are aware of their rights. They may refer taxpayers to Low Income Taxpayer Clinics (LITCs) for legal assistance if eligible.2
How much does it cost to use the Taxpayer Advocate Service?
The services provided by the Taxpayer Advocate Service are free to eligible taxpayers.1