The National Taxpayer Advocate (NTA) is required by law to submit a year-end report to Congress. Part of that report must list at least 20 of the most serious problems facing taxpayers and make administrative recommendations to mitigate those problems. Not one to overlook the fact that the US tax system needs some serious fixes, the NTA, Nina E. Olson, made 116 administrative recommendations in the "most serious problems" section of Volume 2 of her 2015 year-end report ("Report"), released on August 24.
The Report contains the IRS' responses to each of the 116 administrative recommendations. It also contains the Taxpayer Advocate Service (TAS) analysis of the IRS' responses and in some instances, it sets out its disagreement with the IRS' position.
Issues faced by Americans abroad are analyzed commencing page 35 of the NTA Report. Here, the NTA sets out the overall premise that the IRS is not being responsive to American taxpayers living overseas who have very unique tax needs. The IRS strategy for "service on demand" was called out in the Report and basically was given failing grades, much of this due to the closure of all tax attache offices around the world and last year's termination by the IRS of the Electronic Tax Law Assistance Program (ETLA). The Report notes that currently, international taxpayers have only two options for tax help from the IRS. They can (i) call an overwhelmed, tolled IRS telephone number in the United States or (ii) obtain information from the website, irs.gov. As pointed out in one of my earlier blog posts, oral advice from the IRS and information gleaned from IRS publications and tax forms cannot be relied upon by taxpayers.
The Report states: "The IRS has shut itself off from international taxpayers with no way of knowing whether it is providing the service taxpayers need. Given the complexity of international tax rules and the potentially devastating penalties for even inadvertent noncompliance, the IRS's withdrawal of dialogue makes it more likely taxpayers will get it wrong. It has failed to compensate for the closure of all tax attache offices around the world."
Many of the comments in the Report have been echoed recently by advocate groups for citizens abroad.
NTA made 6 recommendations to address the failures in service to Americans living overseas. These are listed below with the abbreviated IRS response to each, in parenthesis. You can read the Report for further details given by the IRS in its replies to the NTA recommendations, and TAS commentary, when given.
In brief, in most instances, IRS either did not adopt the recommendation, or did not adopt it as written. In the one instance when the recommendation was adopted (Recommendation #4, below), it was adopted on condition IRS gets the resources and funding to permit its implementation.
The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.
Virginia La Torre Jeker J.D.
Virginia La Torre Jeker J.D., is based in Dubai. Virginia has been a member of the New York Bar since 1984 and is also admitted to practice before the United States Tax Court. She has over 30 years of experience specializing in the international aspects of US tax, including FATCA. She has been quoted in the New York Times and Newsweek, and is regularly quoted in many local news articles and publications."
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