National Taxpayer Advocate
Relief Options Include Taxpayer Assistance
Wayne Edmunds and Roxanne Spindle
the complexity of tax law, both substantive and procedural,
the IRS for many years has sought to promote taxpayer compliance
and aid taxpayers that experience problems when dealing with
the IRS. In 1979, the IRS consolidated and formalized its
taxpayer assistance efforts by creating the Office of the
Taxpayer Ombudsman. In 1996, ever sensitive to criticism and
in an effort to provide better service, the IRS replaced this
office with the Office of the Taxpayer Advocate. Taxpayer
mistrust and dissatisfaction remained, however, and Congress
enacted sweeping reform in the IRS Restructuring Act of 1998,
radically overhauling both the IRS organizational structure
and the way the agency conducts its business. One significant
area of change relates to the Office of the Taxpayer Advocate.
Office of the Taxpayer Advocate assists individual and business
taxpayers when established IRS systems and procedures fail
to resolve problems or disputes. The Taxpayer Advocate Service
is not a substitute for established IRS procedures or the
formal appeals process, nor can the National Taxpayer Advocate
reverse legal or technical tax law determinations. A taxpayer
may seek help from the advocate but, in the final analysis,
will prevail only upon showing that the IRS action or position
in question is improper. The advocate’s office is
also responsible for recommending administrative and legislative
changes, in its National Taxpayer Advocate’s Annual
Report to Congress. Furthermore, the advocate can issue
taxpayer assistance orders to help taxpayers who face hardships
as a result of actions taken by the IRS.
detailed in IRC section 7803, the National Taxpayer Advocate
is appointed by the Secretary of the Treasury, after consultation
with the IRS Commissioner and the Oversight Board. The National
Taxpayer Advocate reports directly to the Commissioner,
but operates independently from the IRS.
Qualifications and Job Description
an individual possessing a background in both customer service
and tax law with experience in representing individual taxpayers
before the IRS may serve as the National Taxpayer Advocate.
Additionally, an individual must not have been employed
by the IRS during the two-year period immediately prior
to appointment and must agree not to accept employment with
the IRS for at least five years after leaving the post.
section 7803 outlines the National Taxpayer Advocate’s
responsibilities. Specifically, the advocate is charged
with the following duties:
Assist taxpayers in resolving problems with the IRS;
Identify areas in which taxpayers have problems when dealing
with the IRS;
Propose changes to IRS administrative practices to mitigate
future problems; and
Identify possible changes to the law in order to mitigate
National Taxpayer Advocate is subject to congressional oversight
and each year must submit two reports to the House Ways
and Means Committee and the Senate Finance Committee. Reports
must be submitted directly to each committee with no prior
review or comment from the Secretary of the Treasury, the
Commissioner of the IRS or other Treasury officer, or the
Office of Management and Budget (OMB). One report, due by
June 30 of each year, outlines the objectives of the Office
of the National Taxpayer Advocate for the year and includes
statistical information and a full and substantial analysis.
The second report, due by December 31, is an activities
report that identifies initiatives taken to improve taxpayer
service and the IRS response to taxpayer problems. This
report should include summaries of at least 20 of the most
serious problems encountered by taxpayers when dealing with
the IRS. To help in this endeavor, the Taxpayer Advocate
Service maintains an Office of Systemic Advocacy and manages
the Taxpayer Advocacy Panel.
of Systemic Advocacy. The Office of Systemic
Advocacy’s purpose is to advocate change that benefits
groups of taxpayers. Systemic advocacy refers to identifying
and addressing systemic tax problems by analyzing the root
causes and recommending corrective action. A systemic issue
affects a segment of the taxpayer population and involves
systems, processes, policies, procedures, or legislation;
it requires study, analysis, recommendations, and action
to effect a positive resolution. The IRS has developed a
new Internet-based program for taxpayers to use to submit
systemic problems and suggestions to improve tax administration,
available at www.irs.gov/advocate/index.html.
Advocacy Panel. The Taxpayer Advocacy Panel
(TAP) acts as a two-way conduit, serving as a focus group
for the IRS that provides input on strategic initiatives
and as a venue for raising issues identified by citizens.
TAP listens to taxpayers, identifies taxpayer issues, and
makes suggestions for improving IRS service and customer
Treasury Department created the Taxpayer Advocacy Panel
in October 2002 by expanding the old Citizen Advocacy Panel.
Each panel member is a U.S. citizen who will volunteer approximately
300 hours during the year. The panel includes small business
owners, retired military personnel, professors, tax professionals,
and one former state legislature member. During 2003, the
panel focused on priority topics concerning individuals
and small businesses.
Taxpayer Advocacy Panel has identified navigating the IRS
as the number-one problem faced by both individuals and
business owners. The second most serious problem was delay
in the processing of offer-in-compromise (OIC) cases. Key
legislative recommendations in the report address the ability
of victims of discrimination to adjust income for attorney
fees, the treatment of married couples co-owning a business,
and taxation of children’s income. The most litigated
tax issues are the nonfiling/underreporting of income, and
taxpayers’ rights in collection due-process hearings.
1998 IRS Restructuring Act requires the IRS to maintain
a system of local taxpayer advocates. Local taxpayer advocates
have primary contact with taxpayers that encounter problems
dealing with the IRS. The IRS currently has at least one
taxpayer advocate per state, who report directly to the
National Taxpayer Advocate. To further ensure independence
from day-to-day IRS operations, each local taxpayer advocate
office maintains separate means of communicating with taxpayers:
separate telephone line, separate fax line, and separate
IRS provides IRS Publication 1546, Taxpayer Advocate
Service, to assist taxpayers who seek help. Publication
1546 contains step-by-step instructions on how to reach
a local taxpayer advocate, what to expect from the advocate,
and what information the taxpayer should be prepared to
provide. Publication 1546 also contains the address, telephone
number, and fax number for each local taxpayer advocate
promote taxpayer awareness, every IRS notice of deficiency
must inform the taxpayer of the right to contact a local
office of the National Taxpayer Advocate.
reach a local taxpayer advocate, a taxpayer may:
Visit the Taxpayer Advocate website at www.irs.gov/advocate;
Telephone, fax, or write the nearest local taxpayer advocate
office, using the address and numbers provided in Publication
Telephone the National Taxpayer Advocate toll-free number
Telephone the general IRS toll-free number (800-829-1040)
and ask for taxpayer advocate assistance.
1546 states that the local taxpayer advocate will provide
The name and telephone number of the individual assigned
to the case;
An impartial and independent review of the problem;
Time frames for action;
Updates on progress;
Advice on how to prevent future problems.
possible, the local taxpayer advocate will investigate the
matter and assist the taxpayer in achieving a satisfactory
resolution. It should be remembered, however, that the taxpayer
advocate system is a service arm of the IRS, not a panacea
for all taxpayer problems, and, as noted, not a substitute
for established IRS procedures and cannot, for example,
replace the formal appeals process.
way in which the National Taxpayer Advocate assists taxpayers
is by issuing taxpayer assistance orders (TAO), which typically
involve collection issues and instruct the IRS to take a
specific course of action or refrain from a specific course
of action in order to protect the taxpayer from significant
hardship. The order will allow additional time for review
of the case and a determination of whether the original
action was proper. The National Taxpayer Advocate is also
authorized to specify a time period within which the action
required in the TAO must be completed.
the National Taxpayer Advocate may initiate a taxpayer assistance
order, an order is usually issued in response to a specific
taxpayer request. To request a TAO, an aggrieved taxpayer
should file an application with the Office of the National
Taxpayer Advocate, indicating that the taxpayer is suffering
or is about to suffer a significant hardship because of
the manner in which the IRS is enforcing the tax law. A
taxpayer may use Form 911, Application for Taxpayer Assistance
Order. Alternatively, a taxpayer may simply submit a written
statement, signed by the taxpayer or a duly authorized representative,
setting out the following:
Taxpayer information (taxpayer name, identification number,
and mailing address);
The type of tax and the period in question;
A description of the IRS action or proposed action that
is causing or is about to cause the hardship;
The IRS office and IRS personnel involved (if known);
A description of the hardship caused or about to be caused;
The nature of the relief sought.
the case of a potential levy of property where the taxpayer
claims hardship, a revenue officer attempting to levy is
instructed to assist the taxpayer in preparing Form 911
and route the form to the district Taxpayer Advocate. Further
enforcement action should be withheld during the Taxpayer
hardship. As noted, relief is available only
to a taxpayer who is suffering or is about to suffer “significant
hardship.” The request should clearly describe the
hardship, which IRC section 7811 defines as including the
The existence of an immediate threat or adverse action;
A delay of more than 30 days in resolving a taxpayer account
The likelihood that the taxpayer will incur significant
costs (including professional fees) if relief is not granted;
The likelihood of irreparable injury or long-term adverse
impact if relief is not granted.
accompanying Form 911 add two additional criteria for issuance
of a taxpayer assistance order:
The taxpayer has not received a response or resolution
to the problem by the date promised; and
A system or procedure has failed to operate as intended
or has failed to resolve the problem or dispute.
hardship” generally refers to a serious privation
resulting from the manner in which the laws are being administered
by the IRS rather than from the law itself. A taxpayer’s
mere economic or personal inconvenience does not constitute
significant hardship. Significant hardship is a subjective
determination made on a case-by-case basis.
example, a levy served on a taxpayer’s checking account
after the taxpayer had entered into a formal installment
agreement with IRS might result in a significant hardship.
In general, the IRS does not issue levies after taxpayers
have entered into formal agreements. A levy that leaves
insufficient funds in the account to cover checks that have
been written could affect the taxpayer’s credit rating,
and the taxpayer might request that the levy be released.
If the Taxpayer Advocate agreed, the levy would be released.
Letter Ruling 200152045, November 15, 2001, a taxpayer accidentally
remitted substantial excess payroll taxes to the IRS. Normal
tax refund procedures do not authorize the IRS to grant
refunds until after the close of the quarter and after a
quarterly return claiming the refund has been filed. In
the ruling, the IRS suggested that the taxpayer file a Form
911. If the Taxpayer Advocate determined that waiting for
the normal refund procedure created a significant hardship,
then it could issue a TAO to resolve the significant hardship.
deciding whether to issue a TAO in a situation where the
IRS has failed to follow its own published guidelines, the
National Taxpayer Advocate must make determinations in a
manner that is most favorable to the aggrieved taxpayer.
Most requests for taxpayer assistance orders seek relief
from collection activity. A TAO may, for example, order
the IRS to release taxpayer property that has been levied
upon, or order the IRS to cease an action, take an action,
or refrain from taking an action regarding collection, immediate
assessment in bankruptcy or receivership, or demand for
payment of claims not pending in such proceedings, examination,
or inspection as well as any other provision of law described
in the TAO.
is generally binding on the IRS. A TAO may be modified or
reversed only by the National Taxpayer Advocate or the Commissioner
or Deputy Commissioner of the IRS, and only after providing
a written explanation setting out the reasons for the change.
may not use a taxpayer assistance order to delay collection
until expiration of the statute of limitations. A request
for a TAO will suspend the running of the statute of limitations
until the date of the TAO decision, plus any additional
time specified in the TAO itself.
Edmunds, JD, MLT, CPA, and Roxanne Spindle,
PhD, CPA, are both associate professors at Virginia
Commonwealth University in Richmond, Va.