If you've got an IRS letter on your desk right now, you have a decision to make, and the clock matters. I'm Darrin Mish. I've spent 32 years helping people with exactly this kind of situation. Here's what you should do.
According to National Taxpayer Advocate, Nina E. Olsen all is not well with the IRS. Its annual report on the affairs of the IRS has much to say. Click here to read or watch more IRS Help resources.
Firstly, the IRS staff is overworked. With the flurry of stimulus programs taken under the American Recovery and Reinvestment Act (ARRA) 2009 that introduced multiple tax benefits like the making work pay tax credit, first time home buyers incentive tax break, cash for clunkers tax program, opportunity credit for parents and college students and the energy credit for those going green with their home renovations, the IRS has much more to explain to taxpayers. The task of educating taxpayers about these tax benefits has clearly been too much for the IRS who now aims for a 71% response rate to phone calls from the public. This would mean that 29% of phone calls to the IRS would not even be answered on the best of days.
The difficulty in getting their phone calls answered by an IRS personnel is the public’s number one complaint about the agency, according to the Taxpayer Advocate Service. On average, 3 calls out of every 10 will go unanswered after a 12 minute waiting period. This is a drop from 2 unanswered calls out of every 10 three years ago. To Nina E. Olsen, this level of customer service is unacceptable.
Secondly, the IRS does not have an effective strategy to collect debts. At present, it relies too much on liens. A lien is a claim made on a property or income when the taxpayer has failed to pay his or her taxes. The problem with excessive use of liens arises due to the IRS’ computerized system. This automated system has resulted in liens being filed on taxpayers with little or no property and where chances of collecting the debt are slim. The Taxpayer Advocate Service feels that human processing of liens would be more accurate. But the IRS has insisted that imposing liens is necessary to get a majority of defaulting taxpayers to pay up their debts.
A third problem is a preference for correspondence audits. This tends to produce more errors than personal, face-to-face audits.
Fourthly, there is the question of how much delinquent tax the IRS actually collected between 2005 and 2007. The initial figure reported was $118 billion but this was subsequently revised in a footnote to only $86 billion. This was a substantial drop of about 27%. The calculation of neither sum was adequately explained.
The Taxpayer Advocate Service is an independent office within the IRS that is tasked by Congress to see to the interests of taxpayers.