Taxpayer Advocate Service: Purpose, History, Performance, and Resources

Taxpayer Advocate Service: Purpose, History, Performance, and Resources

Updated July 7, 2022
Taxpayer Advocate Service: Purpose, History, Performance,
and Resources
The Taxpayer Advocate Service (TAS) is intended to play a
taxpayers while looking at their situations for conditions
significant role in protecting taxpayer rights and fostering
that may warrant the involvement of case advocates. These
taxpayer confidence in the accountability and integrity of
advocates are authorized to pursue four courses of action:
the Internal Revenue Service (IRS). TAS does this by
(1) assist taxpayers with self-help options, (2) act to resolve
receiving and seeking to resolve taxpayer problems in
the problems with the IRS, (3) establish a case assuming a
working with the IRS. This In Focus looks into TAS’s
taxpayer meets the TAS criteria, and (4) refer the taxpayer
purpose and procedures, history, performance, and
to the appropriate IRS office for help.
resources.
TAS has also managed the low-income taxpayer clinic
Purpose and Procedures
grant program since 2003. The program provides up to
The authority of the TAS and its director, the National
$100,000 in grants to organizations that offer assistance to
Taxpayer Advocate (NTA), is set forth in Sections 7803(c)
taxpayers in IRS proceedings and inform non-English
and 7811 of the federal tax code. The NTA is appointed by
speakers about their tax obligations and their rights as
the Secretary of the Treasury and has no term limit. TAS’s
taxpayers.
statutory mission is to help taxpayers resolve problems with
the IRS; identify issues in dealing with the IRS that affect
History
large numbers of taxpayers; and propose legislation and
TAS evolved from an IRS taxpayer advocacy program
changes in tax administration to address those issues.
begun in 1977 known as the Problem Resolution Program
(PRP). The PRP served two purposes: (1) to give taxpayers
TAS has two main functions, as specified in Internal
another option for addressing problems that were difficult
Revenue Code (IRC) Section 7803(c)(2): case advocacy
to resolve through IRS’s district offices and service centers,
and systemic advocacy. Case advocacy is concerned with
and (2) to enable the IRS to identify and correct
protecting taxpayer rights before the IRS and helping
administrative problems affecting large numbers of
taxpayers resolve problems with the IRS. Systemic
taxpayers. PRP assistance was available only to taxpayers
advocacy focuses on identifying systemic problems with
who had been referred to the program by an IRS agent who
taxpayer services that affect large numbers of taxpayers and
had verified that the taxpayers had tried and failed to get
recommending legislative or administrative remedies.
their problems resolved or questions answered through the
IRS’s regular taxpayer assistance channels. In 1979, the
TAS receives cases through a variety of sources. These
IRS created the Office of the Taxpayer Ombudsman (TO)
include referrals from the IRS and congressional offices;
to manage the PRP; the TO was appointed by and reported
direct contact with taxpayers via email, regular mail, and
to the IRS Commissioner.
the NTA’s toll-free telephone lines; and visits to Local Tax
Advocate offices (LTAs).
Although the PRP provided a better pathway for taxpayers
to resolve IRS problems and concerns than previous
TAS only accepts cases that meet certain criteria. A case
options, some argued that it was not serving as an
has to present an economic or a procedural burden to a
independent source of taxpayer advocacy within the IRS.
taxpayer, or raise questions about the impact of the IRS’s
To back this claim, critics pointed out that PRP employees
policies and procedures on a taxpayer’s rights. In addition,
located in district and service centers did not report directly
the NTA can take on cases because of broader policy
to the TO but to their IRS managers instead.
concerns tied to them.
To address this concern, Congress passed the Taxpayer Bill
For some cases, TAS resolves problems by exercising its
of Rights (TBOR 1), as part of the Technical and
statutory or delegated authorities. When TAS lacks the
Miscellaneous Revenue Act of 1988 (P.L. 100-647). TBOR
requisite authority, it can issue an Operations Assistance
1 codified the TO position in IRC Section 7811 and granted
Request (OAR) to the IRS office capable of resolving a
the TO the authority to issue TAOs when the TO
taxpayer’s problem. If TAS and an IRS office cannot agree
determined that a taxpayer was suffering, or about to suffer,
on a course of action, the former can issue a Taxpayer
a “significant hardship” because of IRS enforcement
Assistance Order (TAO) to require the IRS to take or
actions.
refrain from certain lawful actions by a specified date.
Congress replaced the TO with the Office of the Taxpayer
To strike a balance between the volume of inquiries TAS
Advocate (OTA) when it passed the Taxpayer Bill of
receives and its resources, TAS employs an “intake
Rights 2 (TBOR 2, P.L. 104-168) in 1996. TBOR 2
strategy” intended to provide immediate assistance to
authorized the OTA to help taxpayers resolve certain
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Taxpayer Advocate Service: Purpose, History, Performance, and Resources
problems with the IRS, identify broad taxpayer issues
since 2011, TAS’s FY2022 budget would be $274.1
concerning the IRS, and propose administrative and
million, instead of $221 million. In addition, TAS’s number
legislative options for addressing those issues. TBOR 2 also
of full-time equivalent (FTE) employees totaled 1,742 in
altered the rules for TAOs so that they could be modified or
FY2017, about 19% less than the FY2011 total. These
rescinded only by the TA, the IRS Commissioner, or the
declines contributed to a 44% decrease in the number of
IRS Deputy Commissioner and could include a deadline for
cases worked by TAS from FY2011 to FY2017.
the IRS to take corrective action.
The caseload for TAS caseworkers has increased in recent
TBOR 2 did not address the institutional independence of
years. The average caseload per employee more than
the OTA. This issue was addressed in the final report of a
doubled between the second quarter of FY2017 and the
commission Congress created in 1996 to recommend ways
second quarter of FY2021, according to the NTA. This rise
to “restore public trust in the IRS.” The report pointed out
was driven by the large growth in the IRS’s inventory of
that while the OTA should operate as an “independent
unprocessed tax returns and unanswered taxpayer
voice for the taxpayer within the IRS,” it was unable to do
correspondence in FY2020 and FY2021.
so because the OTA had always been managed by career
IRS employees, setting the stage for conflicts of interest.
To manage its growing caseload, TAS recently issued a
notice that it is limiting its acceptance of cases involving
The commission’s findings helped pave the way for the
original and amended paper returns from the 2021 tax year
enactment of the IRS Reform and Restructuring Act of
from all sources except congressional offices. TAS may
1998 (RRA98, P.L. 105-206). Among other things, RRA98
revise this restriction by October 15. There is no such limit
renamed the TA as the National Taxpayer Advocate (NTA)
on cases from congressional offices.
and renamed the OTA as the Taxpayer Advocate Service
(TAS). The act also enhanced the independence of the NTA
Policy Issues
by requiring that the position be filled by someone with a
As Nina Olson, a former NTA, has commented, the
background in customer service and experience
structure of TAS “causes tension and even conflict.” In her
representing taxpayers. It also specified that an officer or
view, such an outcome is inevitable for an organization that
employee of the IRS cannot serve as the NTA during the
assists taxpayers in resolving IRS problems but is
two years before or the five years after his or her tenure.
embedded within the IRS.
While the NTA (like the TO) continued to report directly to
the IRS Commissioner, the NTA was appointed by the
Olson maintains that a key to balancing TAS’s need to be
Secretary of the Treasury, after consulting with the IRS
independent with its placement within the IRS is for TAS
Commissioner and the IRS Oversight Board. In addition,
employees to remain advocates for taxpayers through their
RRA98 created LTAs in every state and mandated that they
work. They do this by trying to independently and
report directly to the NTA. (Presently, there are 78 LTAs.)
impartially examine the facts of a case and applying tax
law, IRS procedures, and their knowledge of internal IRS
Performance
processes to reach an agreement with a taxpayer over how
The most recent detailed figures on TAS casework
TAS might help resolve his or her IRS problem.
available to CRS are for FY2021. That year, TAS received
264,343 cases and closed 246,702 cases. (In a recent blog,
A concern with organizational independence has been a
NTA estimated that the number of new cases in FY2022
perennial issue since the days of the PRP. Some argue that
could total 253,000.) TAS provided full or partial relief to
TAS and the NTA can fulfill their mission only if they
taxpayers in 79% of the cases closed in FY2021. Measured
operate independently of IRS management and its priorities.
as a percentage of the total number of cases received in
Given that conflicts may arise from time to time between
FY2021, the top three issues were unposted and rejected
TAS and the IRS, Congress may consider periodically
returns (17.3%), pre-refund inquiries and wage verification
examining how the relationship between the two entities
holds (14.0%), and amended return processing (7.0%).
might be affecting TAS’s effectiveness as a taxpayer
advocate.
TAS Budget and Staffing
Taxpayers receiving help from TAS pay nothing for the
Some critics of TAS and NTA claim that they are not truly
assistance. Instead, the cost is covered by TAS’s budget,
independent of the IRS because they are IRS employees. In
which is funded entirely out of IRS appropriations for
their view, both should be eliminated and more resources
taxpayer service. In FY2022, TAS is receiving $221 million
should be channeled into training IRS employees to make
in appropriations, at least $5.5 million of which must be
them better at their jobs and more skilled at resolving
used for cases involving identity theft or refund fraud.
taxpayer problems. They maintain that the office of the
While it is unclear how the FY2022 budget will be divided
NTA represents a layer of unneeded bureaucracy within the
between case advocacy and systemic advocacy, the former
IRS.
typically receives the vast share of funds; in FY2017, 78%
of TAS’s budget ($206.9 million) went to case advocacy,
Gary Guenther, Analyst in Public Finance
and 4.5% to systemic advocacy.
IF12146
Budget cuts since FY2011 have significantly reduced
TAS’s resources. If its budget had kept pace with inflation

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Taxpayer Advocate Service: Purpose, History, Performance, and Resources

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https://crsreports.congress.gov | IF12146 · VERSION 3 · UPDATED