The National Taxpayer Advocate Report was delivered by Nina E. Olson on Wednesday. She called on the IRS to change how it deals with taxpayers struggling to pay overwhelming back tax bills. Here's the highlight reel:
-Nina clams that the biggest issue taxpayers face is the growing complexity of the tax code. She calculates that is costs taxpayers nearly $200 billion a year to comply with the tax code.
-Nina goes on the claim that the IRS's harsh approach to collections is the second most serious problem facing taxpayers.
-Nina Olson was particularly concerned about the IRS' reluctance to accept "offers in compromise" to allow taxpayers facing dire straits to settle for less than they owe.
-In fiscal 2008, the IRS accepted just 10,677 offers, down 72% from the 38,643 offers it accepted in 2001. "Ten thousand offers accepted in one year? That's just absurd. There's no other word for it,'' Olson said.
-"Offers in compromise should get from the taxpayer the reasonable collection potential, not the maximum amount possible under any possible scenario potential,'' Olson said. She criticizes how the IRS includes home equity in it's determination for an Offer in Compromise.
-A collapse in the Offer in Compromise program is attributed to the requirement that taxpayer submit 20% of their offer in cash for certain Offer in Compromise payment programs. If the Offer is denied, the 20% of the offer is not refundable. Offers are denied three out of four times they are submitted.
Nina Olson delivered the 2009 Annual Taxpayer Advocate Report to Congress a day after IRS Commissioner Douglas Shulman said he would instruct IRS employees to be more lenient on taxpayers suffering from the current economic crisis. Although Nina Olson praised him for sending the important message, she adds that the measures he outlined aren't enough the fundamental problems with the IRS system.