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Posts Tagged ‘IRS’

Little Known IRS Office That Actually Works For the 99%

This posting is considerably longer than any other I have ever done. Take my word for it. Ignore the “TL;DR” crowd, this one you will really enjoy! It’s the inside story about a government office that actually works to save all of us from paying more taxes than we should.

DEFENDER OF LAST RESORT…Nina Olson is director of the Taxpayer Advocate Service, whose job is to oversee “advocates” in every state. These employees of the IRS who represent taxpayers in egregious disputes with the service. The advocates are grease in the gears of an agency that gets jammed all too often.

Olson wins relief for 70 percent of the 300,000 people and businesses that open a case

There has been only one national taxpayer advocate, Olson, has held the position since Congress created it a decade ago. She presides over 2,000 caseworkers and data analysts–a sliver of the IRS, which employs over 100,000 people. Individuals, corporations, small businesses, even millionaires and sovereign nations have sought the help of the  Taxpayer Advocate Service, as have accountants and trained tax preparers who find the tax code and the IRS impossible to navigate. In a typical year, Olson wins relief for 70 percent of the 300,000 people and businesses that open a case, according to her office. Many of these petitioners have usually exhausted most other opportunities for recourse and are often experiencing severe economic hardship.

Though she has characterized IRS procedures as Kafkaesque, Olson empathizes with the agency. Congress is constantly demanding that it collect more revenue, both to bridge what’s known as the tax gap–the more than $385 billion discrepancy between the revenue  the IRS actually collects and the amount the government believes it is owed each year–and to pay down the federal deficit. While Congress demands more money from the IRS, however, it has not been generous in funding the agency.

Congress is also making the tax code more complicated every day. Right now it tops out at 3.8 million words, four times as long as War and Peace. The IRS doesn’t have the manpower to manage the scads of credits and changes to the code it is required to enforce. And computer glitches are entangling more people in audits than ever before–millions in just this year.

“For the majority of taxpayers, the IRS has become faceless, nameless, with no accountability and no liability.”

Part of Olson’s job is to target the agency’s failures and shame it into fixing them. At the same time, she’s looking at taxpayers and trying to figure out why some of them don’t pay. She recently gave a speech to the Federal Bar Association’s annual lunch with the  theme: How the 99% experiences the tax system. She started with the bad news:

  • One in three won’t get their calls to the IRS answered.
  • The wait time for half of all people who have written to the IRS is more than six weeks.

When I heard that“, she exclaimed, whacking her head, “I nearly hit my head against a wall.” “For the majority of taxpayers, the IRS has become faceless, nameless, with no accountability and no liability.” One of the attorney’s in the audience said “she’s completely right”. He called his dealings with the IRS “a hall of mirrors, where there are no real people and only disembodied voices with badge numbers.” He  was recently snarled with a two-year fight to reverse a $24,000 penalty for a client, a Midwest manufacturer. He said “No business could stay in business behaving the way the IRS does toward people.” The case was resolved only after he brought it to the local affiliate of Olson’s agency.

“I saw the consequences of an irrational and overly burdensome approach to tax administeration,”

Olson, 58, is an improbable insider, an animated woman who prefers hot pink blazers and jangly earrings to power suits. She lives in a D.C. townhouse and walks two miles to work every day. When she was younger, she wanted to be a painter. She studied fine arts at Bryn Mawr College in Pennsylvania and moved to Chapel Hill, N.C., after graduation to start her painting career. She took a part-time job working for a lawyer, whose clients were local wineries, coffee shops, and artists. Olson had a knack for numbers and organizaton, so friends and local businesspeople started asking her to prepare their tax returns. To her surprise, she was good at it. She bought a copy of the tax code and taught herself its ins and outs. In 1987 she enrolled in North Carolina Central University School of Law, taking night classes while working for the lawyer and raising her son by herself. Four years later she became a tax attorney. In 1991 the local bar association asked if she’d be willing to take on some pro bono work. Olson wanted to use her tax expertise to help those who were unable to buy groceries or pay rent because the IRS was levying their paychecks. The following year she started an independent low-income tax clinic, the first of its kind in the country. Soon  the clinic was serving about a thousand taxpayers. One woman was an immigrant from Egypt, who earned $10,000 a year as a hairdresser and was being charged about $35,000 by the IRS. The woman’s husband, who beat her, had defrauded the IRS without her knowledge. When the agency uncovered the scheme, he fled  the country. The woman could barely read English and had never filed a tax return, but the IRS viewed her as uncooperative. It took Olson four years to free the woman of her obligations. “I saw the consequences of an irrational and overly burdensome approach to tax administeration,” she says.

In the 1990’s the Senate held scathing hearings lambasting the agency for abusing taxpayers, which eventually led to the passage of the Internal Revenue Service Restructuring and Reform Act in 1998. The new law increased oversight of the IRS and included federal funding to expand low-income tax clinics. It also created the naional taxpayer advocate, a position that reported to then Treasury Secretary Larry Summers, not the IRS commissioner. Two years later she was appointed to become the first, and to date, the only director of The Taxpayer Advocate Service, whose position has no term limits. She told herself that she would stay until she got bored or until frustration with the IRS drove her to quit. “I’m not bored yet”, she says. “And I still have a bit more work to do”.

Olson’s story ran in the April 9–April 15 issue of Bloomberg Businessweek and this posting is an except from it.  As citizens of the United States we are all entitled to make use of this little known service that has resolved many tax problems of the 99%…and we are grateful for such an exemplary government employee as Nina Olson.

If you’ve taken the time to read through this posting and learned something you didn’t know before, as I did, I thank you very much and I would appreciate hearing from any new readers as well as regular followers.

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