July 30, 2020 12:10 am

National Taxpayer Advocate Report

The new National Taxpayer Advocate Erin M. Collins today released her first report to Congress (as required by law), identifying taxpayer challenges arising from the COVID-19 pandemic, the CARES Act, and the IRS’s implementation of the Taxpayer First Act as priority issues the Taxpayer Advocate Service (TAS) plans to focus on in the coming year. The report also assesses the 2020 filing season, identifies other TAS areas of focus, and includes the IRS’s responses to administrative recommendations proposed in the National Taxpayer Advocate’s 2019 annual report. Some key takeaways related to the 2020 filing season:

  • Taxpayers who filed a 2019 paper return and are entitled to refunds may be in for a long wait. The IRS had to suspend the processing of paper tax returns, and as of May 16, it estimated it had a backlog of 4.7 million paper returns.
  • Some taxpayers whose returns were mistakenly flagged by IRS processing filters are experiencing lengthy delays in receiving their refunds.
  • Taxpayers who have needed help from the IRS have had difficulty obtaining it. The IRS shut down its Accounts Management telephone lines, so taxpayers could not reach a live assistor by telephone. The IRS shut down its Taxpayer Assistance Centers, making it impossible for taxpayers to obtain in-person assistance. The IRS also shut down its mail facilities, so it was unable to log or process taxpayer responses to compliance notices. However, the IRS has now begun to open some operations.

The report also addresses the Taxpayer First Act (TFA), which was enacted one year ago and constitutes the most far-reaching revisions to tax administration since the IRS Restructuring and Reform Act of 1998. The TFA included some 23 provisions recommended by the National Taxpayer Advocate. A centerpiece of the TFA is a requirement that the IRS develop four strategic plans:

  1. A comprehensive taxpayer service strategy;
  2. A plan to redesign the IRS’s organizational structure;
  3. A comprehensive employee training strategy that includes training on taxpayer rights and the role of TAS; and
  4. A multi-year plan to meet IRS information technology needs.

The TFA required the IRS to submit its comprehensive taxpayer service strategy to Congress by July 1, 2020. Because of disruptions caused by COVID-19, the IRS has been delayed in developing these plans. It expects to deliver its taxpayer service strategy to Congress by the end of the year.

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Tax Glossary

Capital gain or loss

The difference between amount realized and adjusted basis on the sale or exchange of capital assets. Long-term capital gains are taxed favorably. Capital losses are deducted first against capital gains, and then again up to $3,000 of other income.

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