- Days left

IRS Increases Aggressive Tax Collection Efforts

The IRS has gotten increasingly more aggressive with its tax collections practicesThe need for tax reform and the IRS's harsh collection techniques top taxpayers' most serious problems, according to the National Taxpayer Advocate (NTA) annual report to Congress.

Each year, the National Taxpayer Advocate (NTA) is mandated under the Tax Code to identify at least 20 of the most serious problems encountered by taxpayers and make recommendations about how to solve those problems in a report to Congress. (You can read the entire report here.)

Not surprisingly, this year the NTA, Nina Olsen, identified the need for tax reform as the number-one priority in tax administration. In the Executive Summary, the NTA notes a recent analysis of IRS data which indicated that taxpayers spend a whopping 6.1 billion hours a year in order to comply with filing requirements. "If tax compliance were an industry, it would be one of the largest in the United States," according to the report. "To consume 6.1 billion hours, the 'tax industry' requires the equivalent of more than three million full-time workers."

Also on the list of taxpayer problems? The NTA expressed continuing concern that the IRS's increasing use of hard-core enforcement actions is causing unnecessary harm for taxpayers. The report found that IRS collections efforts don't achieve the obvious goal of getting taxpayers compliant and staying compliant because of the harsh techniques.Specifically noted as an overly-harsh technique: filing liens. In FY2010, the IRS filed protective liens against 1.1 million taxpayers. Compare that total with 168,000 liens filed in FY1999; it reflects an increase of an amazing 550%.

In the past several years, the number of liens has accelerated. Over the past seven years, the number of liens filed by IRS is at least 5 million. This can affect credit ratings, making it hard to find affordable housing and, in some cases, a job.

In a tough economy, the IRS has continued to lien at an even more aggressive rate. The IRS has done this despite little to no effect on collections and may reduce long-term tax collections.
"By filing a lien against a taxpayer with no money and no assets, the IRS often collects nothing, yet it inflicts long-term harm on the taxpayer by making it harder for him to get back on his feet when he does get a job," Olsen said. "Absent data that show liens make a meaningful contribution to revenue collection and especially in this economy, I find it unacceptable that the IRS continues to torment financially struggling taxpayers in this way."

The NTA refers to IRS collections methods as the "same one-size-fits-all approach that it used 30 or 40 years ago" and urges the use of more modern collections efforts and encourages flexibility. The NTA recommends, for example, that the IRS make better use of collections alternatives available to taxpayers such as Offers in Compromise and Installment Agreements. Interestingly, the IRS has shown a marked decrease in granting Offers in Compromise, all while increasing the number of liens filed.

The NTA also expressed frustration that this isn't the first time collections and liens issues have made the list of taxpayer problems. Yet, despite making the list over and over in the last 10 years, neither Congress nor IRS has taken any significant steps to address those issues. The NTA has recommended that this become a immediate priority.

Olsen, who has held the position of National Taxpayer Advocate since 2001, reports to the Commissioner of Internal Revenue, Doug Shulman, on behalf of the Taxpayer Advocate Service (TAS), dedicated to helping taxpayers solve their problems with the IRS. TAS has at least one local taxpayer advocate in every state, the District of Columbia and Puerto Rico. You can find your advocate on the IRS website at Contact Your Advocate. You can also call the TAS toll-free case intake line at 1-877-777-4778.

Increase your money and finance knowledge from home

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

How to Buy a Car

How to get the best deal and buy a car with confidence.

View Course »

TurboTax Articles

Will Medicare/Medicaid be Impacted by ACA?

The Affordable Care Act put in place significant tax-related programs that impact Medicare and Medicaid, such as increased Medicare taxes on earned and unearned income for high-wage earners, and Medicaid changes that increase the number of insured individuals. Establishing whether you are affected by the ACA-imposed taxes, or are eligible for certain health programs that fall under the Centers for Medicare and Medicaid Services, is determined by filing your income tax.

8 Things You Think Are Tax Deductible That Aren't

There?s a fine line between looking to save money on your taxes and taking deductions that will raise eyebrows at the Internal Revenue Service. Some taxpayers are tripped up by expenses that they assume are tax deductions, but don?t qualify under IRS guidelines. Here are a dozen items that can lead to unpleasant surprises in case of an audit.

Essential Tax Forms for the Affordable Care Act

The Affordable Care Act (ACA), also referred to as Obamacare, affects how millions of Americans will prepare their taxes in the new year. The law now includes penalties for all who haven?t obtained health insurance -- and those penalties are expected to be paid at tax time. The ACA also provides tax credits to help people pay for insurance, and you can claim those credits when you file your taxes. The Internal Revenue Service (IRS) has introduced a number of tax forms to accommodate the ACA.

How to Determine if You Have Minimum Essential Coverage (MEC)

The Affordable Care Act, also known as Obamacare, requires most Americans to have health insurance that meets a government standard known as "minimum essential coverage," or MEC. Whether your insurance qualifies as MEC depends not on the plan itself, but on how you obtained your coverage.

What are 1095 Tax Forms for Health Care?

In 2014 the Affordable Health Care Act, also known as Obamacare, introduced three new tax forms relevant to individuals, employers and health insurance providers. They are forms 1095-A, 1095-B and 1095-C. These forms help determine if you need to comply with the new shared responsibility payment, the fee you might have to pay if you don't have health insurance. For individuals who bought insurance through the health care marketplace, this information will help to determine whether you are able to receive an additional premium tax credit or have to pay some back.

Add a Comment

*0 / 3000 Character Maximum