2011 IRS and Justice Department Agendas — Advocates and Adversaries
They're more taxpayer-friendly than you think.
February 24, 2011
While taxpayers and tax practitioners may view both the IRS and the Justice Department as less-than-cooperative organizations, the fact of the matter is that both organizations may be more taxpayer friendly than we think.
I had the pleasure of meeting IRS National Taxpayer Advocate (NTA), Nina E. Olson and Sandra Brown, the Justice Department's director of the Central District of California — Tax Division, at the University of Southern California's (USC) Annual Tax Institute last month.
Practitioners can gain valuable insights to the 2011 tax landscape with a clear understanding of what the IRS, the Taxpayer Advocate and the Justice Department are focusing on in the current year. This allows tax professionals to better serve and protect their employers and clients.
As we look at the focus of these two very influential tax professionals, it is important to note that Olson tends to view her constituency as the millions of tax filers throughout the country, and more specifically those filers who encounter legitimate complexities within the extensive IRS bureaucracy.
Brown who also represents U.S. taxpayers is more focused on ensuring that the U.S. Treasury is collecting the proper amounts from these same tax filers.
The IRS Taxpayer Advocate Service (TAS)
The Taxpayer Advocate Service (TAS) department offers free, independent and confidential tax assistance to taxpayers unable to resolve their tax problems through normal channels. TAS helps individual and business taxpayers resolve a wide variety of problems with the IRS including:
Taxpayer Advocate Service (TAS) Mission
As an independent organization within the IRS, TAS helps taxpayers resolve problems with the IRS and recommend changes that will prevent the problems.
Here are seven things that TAS wants every taxpayer to know about their department:
Congressional TAS Report
One of Olson's most effective tools is her annual report to Congress. The major points addressed in 2010, which TAS will continue to focus on in 2011, included:
NTA's Legislative Recommendations
Recommendations for legislation made by the Taxpayer Advocate included:
2010 Most Litigated Issues
The most litigated tax issues identified in the report include:
Tax Division of the U.S. Justice Department
The Tax Division employs more than 350 attorneys in 14 civil, criminal and appellate sections.
According to the U.S. Attorney General's website, the Tax Division's mission is to enforce the nation's tax laws fully, fairly and consistently, through both criminal and civil litigation, in order to promote voluntary compliance with the tax laws, maintain public confidence in the integrity of the tax system and promote the sound development of the law.
The vast majority of civil and criminal crimes also involve tax issues such as unreported income from theft, illegal activities such as drug trafficking or other transactions. Therefore, the Tax Division is constantly prosecuting such cases and will often see local, regional and national patterns of abuse and then develop programs to proactively shut down these abuses. Readers will get a good sense of the types of cases the Justice Department regularly prosecutes by checking their website.
Obviously technology has resulted in more sophisticated taxpayer transactions and frauds. Likewise, the IRS and Justice Department are also utilizing technology to uncover fraudulent transactions. One area of focus in California for 2011 involves somewhat common real estate transfers between family members (e.g. a partial or complete transfer of a personal residence or rental property to a child or parent), which are often exempted for property tax purposes with proper filing of documents with the county property tax assessors. Brown pointed out that her department will be cross-checking such property-tax records to ensure that the proper gift tax returns were filed.
By understanding the focus of both the Justice Department and the IRS, including the TAS, tax advisors and taxpayers are better positioned to anticipate potential tax problem areas, as well as understand the resources for resolution.
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