Nina Olson, US Taxpayer Advocate: 2014 Annual Report to Congress
The Annual Report to Congress creates a dialogue at the highest levels of government to address taxpayers’ problems, protect taxpayers’ rights, and ease taxpayers’ burden.
The report identifies at least 20 of the most serious problems facing taxpayers and offers recommendations to fix them. Some of the issues, like tax reform and IRS’s need to expand its various taxpayer services, affect virtually every American taxpayer. Others, like the Alternative Minimum Tax, refund delays, and tax-related identity theft, impact large groups of taxpayers.
The Taxpayer Advocate Service (TAS), led by the National Taxpayer Advocate, is your voice at the IRS. Some of the problems discussed in this report were first identified when taxpayers came to TAS for help in resolving problems with the IRS.
TAS is an independent organization within the IRS. The National Taxpayer Advocate delivers this report directly to the tax-writing committees in Congress (the House Committee on Ways and Means and the Senate Committee on Finance), with no prior review by the IRS Commissioner, the Secretary of the Treasury, or the Office of Management and Budget.
Download the Executive Summary
Download Volume One
Download Volume Two: TAS Research & Related Studies
… also includes links for specific sections of the report.
Thanks to Neill for this link, which I’m putting into this post, with related comments.
Neill says
January 14, 2015 at 11:23 am
Taxpayer advocate mentions the raw deal earlier OVDP victims had (me):http://www.taxpayeradvocate.irs.gov/2014-Annual-Report/full-2014-annual-report-to-congress/
Offshore Voluntary Disclosure (OVD) Program Inequities. The report describes the evolution of the OVD program and the disproportionate penalties it says were often imposed, particularly with respect to unrepresented taxpayers. The IRS changed the streamlined program in 2014 in ways that allow many taxpayers to pay lower penalties. However, the new rules do not allow taxpayers who already had entered into closing agreements with the IRS at higher penalty rates to amend those agreements. Therefore, taxpayers who are the most deserving of leniency because they were the first to acknowledge they had failed to comply with foreign account reporting requirements ultimately are paying substantially greater penalties than taxpayers who waited until later to acknowledge their noncompliance. Among other things, the report recommends that the IRS revisit this decision.
Neill says
January 14, 2015 at 11:45 am
The TAS section of OVDP is very reasonable. What they propose could ease the burden of a lot of people (new balance limits indexed to inflation). Changing the closed agreements isn’t going to happen given what we know from the OVDP doc dump. They wanted the money and drove people with uncertainty (that did exist) to accept the deal.calgary411 says
January 14, 2015 at 12:21 pm
Thanks for the link, Neill. This should be a post.Two areas (so far) to review for importance to US expats are the sections on Taxpayer Rights and Legislative Recommendation #6 (that you’ve identified), FOREIGN ACCOUNT REPORTING: Legislative Recommendations to Reduce the Burden of Filing a Report of Foreign Bank and Financial Accounts (FBAR) and Improve the Civil Penalty Structure.
Charl has also identified: Robert Wood’s latest at Forbes: National Taxpayer Advocate Slams IRS Offshore Programs & FBAR Penalties, Demands Change
@Polly TABOR is real. Nina Olson proposed it last year and it was adopted by the IRS. The Tax Payer Bill of Rights is not part of the US Constitution so it is at this point more internal policy of IRS rather than the stuff on which legal precedents may be attached. Read Nina Olson’s report this year and it is segmented in areas defined by TABOR. She is trying to strengthen it.
@JC
Halleluyah! But people are still scared and people are still being threatened with 50% penalties, so I don`t know how much of this TABOR has teeth- but it certainly is a start!
@Watcher Thank you for posting that letter. Coincidentally, I today received from my MP exactly the same letter. The key argument seems to be that NS&I is not discriminating on the basis of citizenship, but upon tax status. Anyone liable for tax in any jurisdiction with foreign reporting requirements is affected by the change. (Eritrea need not be explicitly mentioned by NS&I because they do not impose reporting requirements on UK institutions.)
My MP remains sympathetic and writes, “I’m not sure there is any more we can do to press the NS&I on its decision, but do let me know if you have any ideas.”
@George I note your comment about the Master Nationality Rule. I not know that I could make that case to my MP. It sounds like something that would take a court case to resolve.
We have this report from the taxpayer advocate. So what is missing?
I have an impression that letters to the taxpayer advocate do not go straight to the bin. So I’ll give a go this year to try and make an impression for the 2015 report.
So what to ask for consideration?
My preliminary thoughts. We have a report. We have certain language and words that may be quite useful in including in any letter, as if a staff member of the advocate office writing suggestions for the 2015 report. One phrase I like is ‘sanity check.’
I am thinking of focus on these areas.
1) Taxation of my Australian retirement account. I’ll be asking how fair and just is that, and how inequitable in view that Canada and the UK have tax treaty provision for exemptions. There are lots of tax injustices but I think that this is the most simple to convey.
2) Basic compliant that the language the Treasury Department uses in its tax treaties is misleading, such as “prevent double taxation.” If one knows that there is a tax treaty in place that prevents double taxation than it may be less obvious to them the need to file US tax.
3) I want lots of focus on compliance time and cost – way over the top for US persons overseas. There was not this focus in the report, such as a separate heading for this.
Let’s add in today’s latest form 8965 proof of health insurance for non-residents:
https://americansabroad.org/issues/taxation/another-new-tax-form-americans-abroad/
Badger. Very interesting. 6000 Canadians opted out or entered streamlined. I suspect Ms. Olsen separated Canada out as an example of a non tax haven country.
the average tax assessed was $110. What a stupid expensive waste of time. Keeps accountants and IRS agents employed however.
@bubblebustin, and @Portland PLC, I think there must be a significance behind why the IRS itself was keeping separate stats on the disposition of the Canadian cases. Would be interesting to know if the word “Canadian” meant Canadian citizens, or more broadly, those residing in Canada.
@JC
Double taxation
@Badger
Soon after we entered OVDI, the Treasury Department reimbursed the private letter ruling fee we paid to have our RRSP’s cleared by the IRS. We were told that they be dealt with in OVDI. I’d heard elsewhere (can’t remember where) that Canadian participants were being dealt with separately from others. Phil Hodgen sheds light on the RRSP problem in the early days of OVDI:
Has the IRS crossed the RRSP Rubicon?
“Regular readers of this blog know that I talk frequently about RRSPs. (For those of you who don’t know, RRSPs are Canadian “do-it-yourself” pension plan arrangements, like an Individual Retirement Account (“IRA”) in the United States.) A whole bunch of OVDI participants are about to go down the rabbit hole to Alice-in-Wonderland tax logic, as the Commissioner tries to decide what to do with RRSPs.”
http://hodgen.com/has-the-irs-crossed-the-rrsp-rubicon/
Here is the latest (and he says last – unless he changes his mind) word on RRSPs from Phil Hodgen: http://isaacbrocksociety.ca/2015/01/15/updated-2015-solving-us-citizenship-problems-have-you-received-a-fatca-letter/comment-page-1/#comment-5273063
From Phil Hodgen today (Jello-Shot email) and I’m putting it here only as it is related, the account (RRSP) most Canadians hold in the banks that will be sending some of us letters:
There is something so shocking about the fact that the IRS has these reports and all this information even as a part of its own inner workings – and yet is so SLOW to implement change. In Germany they say: “its like pulling teeth”. You get a millimetre here and a millimetre there. In reality- there should be a full stop and a total revision ( also retroactively because that is like holding on to money that isn’t rightfully theirs).
Another piece to the puzzle for our badger to use in putting together the “Canadian connection” picture?
I was going to make a post of this, but I see nothing regarding any international taxpayer issues. Why not?
National Taxpayer Advocate, Nina Olson, Testifies Before House Committee on Annual Report to Congress
Today National Taxpayer Advocate Nina Olson testified before the House Committee on Oversight and Government Reform about her 2014 Annual Report to Congress.
She discussed this year’s tax filing season and the key points of the report, including the IRS’s failure to meet taxpayers’ need for service, which she said erodes taxpayer trust in the system and undermines voluntary compliance.
Watch the full testimony: House Committee on Oversight and Government Reform: The Taxpayer Advocate’s Annual Report.
Read the full text of the testimony.
Do I see any reference to unfair tax imposed on Americans overseas ?
Et tu, Brute ?
Nina Olson supports and has continually the problems for international taxpayers. We fade into the shadows with all else that is wrong for taxpayers in the homeland.
We fade into the shadows
Hopefully we could have been in the spotlight instead of offstage
SHOULD have been, Jak Dac.
We may have been thrown into the orchestra pit.
Contact your US contacts and ask that they agree go to site and Facebook / Tweet away
If this was NINA I eat my words
the Same Country Exemption could be put in place almost immediately; it does not require Congressional action. It is a change that everyone, including Treasury Department and the IRS, should be enthusiastic about.”
Cheers
J D
https://americansabroad.org/files/5914/2913/2714/tax-advocate-recommendations-13-april-2015.pdf
https://app.box.com/s/yn25x1gketbzrkqp2ghu5sbce7mqoy
Tax Advocate recommends changes for taxpayers abroad
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The National Tax Advocate has recommended that the FBAR rules and the FATCA rules for reporting bank accounts on Form 8938, should in effect be merged. Also, the FATCA rules for identifying and reporting accounts of Americans abroad, where the accounts are in the same country where the taxpayer resides, should be changed. Taxpayer Advocate statement here (April 13, 2015).
As noted in the National Tax Advocate’s recommendations, ACA has been a leading advocate, especially of the Same Country Exemption. Together with other groups, ACA recently met with the Treasury Department to push for this change. ACA recently published a detailed position paper (April 9, 2015) describing how the Same Country Exemption could be made to work.
“We are very happy to see progress made on these subjects,” said Marylouise Serrato, Executive Director, American Citizens Abroad, Inc. “But we cannot rest in our efforts to get these changes actually made. For sure, the Same Country Exemption could be put in place almost immediately; it does not require Congressional action. It is a change that everyone, including Treasury Department and the IRS, should be enthusiastic about.”
Last Updated April 15, 2015
“We” are not in top 10
On Tax Day, Wyden Calls for Comprehensive Reform to Make Tax System Work for All Americans
Ranking Democrat Tallies Ten Ways Current Broken Tax Code Hurts Middle-Class Families
http://www.finance.senate.gov/newsroom/ranking/release/?id=595484BB-1C35-4DBE-849C-5CBDDCAA2F97
Do we have the Individual and International committee email addresses ? Lets email them
Group topics and co-chairs include:
1. Individual income tax – Sens. Charles Grassley (R-Iowa) and Mike Enzi (R-Wyo.); Sen. Debbie Stabenow(D-Mich.);
2. Business Income Tax – Sen. John Thune (R-S.D.); Sen. Ben Cardin (D-Md.);
3. Savings and Investment – Sen. Mike Crapo (R-Idaho); Sen. Sherrod Brown (D-Ohio);
4. International Tax – Sen. Rob Portman (R-Ohio); Sen. Charles Schumer (D-N.Y.); and
5. Community Development and Infrastructure – Sen. Dean Heller (R-Nev.); Sen. Michael Bennet (D-Colo.).
Each group will analyze current law and examine policy trade-offs and available reform options within its designated topic area and will work directly with the nonpartisan Joint Committee on Taxation (JCT) to produce an in-depth analysis of potential legislative solutions.
While these groups continue to work, Hatch and Wyden are soliciting ideas from interested members of the public and stakeholders on the committee’s ongoing tax reform efforts. The goal of this effort is for outside parties to provide additional input, data and information to the bipartisan working groups. Individuals, businesses, organizations, and advocacy groups interested in submitting comments should send an email to the below bipartisan group or groups that relates to their area of interest. Please send submissions to each group of jurisdiction if an interest area covers more than one group.
Individual Income Tax – Individual@finance.senate.gov
Business Income Tax – Business@finance.senate.gov
Savings & Investment – Savings@finance.senate.gov
International Tax – International@finance.senate.gov
Community Development & Infrastructure – CommunityDevelopment@finance.senate.gov
The findings and recommendations of each group will be compiled into a comprehensive report that is expected to be completed by the end of May. Submissions from stakeholders will be reviewed by the working groups and ideas can be incorporated into the each working group’s final recommendations. The five working group recommendations will be delivered to Chairman Hatch and Ranking Member Wyden and will serve as a foundation for the development of bipartisan tax reform legislation.
What do you mean? We’re number 8: The well-off are gaming the system through offshore tax avoidance. Billions of dollars are being hidden in undisclosed off-shore accounts, leaving taxpayers and small business to foot the bill. Last year alone the Treasury and state governments lost nearly $110 billion in tax revenues through offshore tax havens.
That’s us they’re talking about. This does not bode well.