Today, the Oversight Subcommittee, chaired by Rep. Vern Buchanan (R-FL), held a hearing regarding the Internal Revenue Service’s (IRS) dispute resolution options and discussed ways to reform the current administrative review process to more efficiently resolve conflicts and better serve taxpayers.
As Chairman Buchanan stated in his opening remarks:
“In a system of voluntary tax compliance, even with the simplest of tax codes – and ours is currently not one of those – there are bound to be disputes between taxpayers and the IRS … Ensuring the independence and availability of this administrative review process for taxpayer disputes remains a top priority of this Subcommittee.”
“For most taxpayers, their only interaction with the IRS is when they file their taxes once a year. But when taxpayers do find themselves in a dispute with the agency, they deserve a fair and prompt process.”
Members heard testimony from tax professionals and advocates from across the country who have seen firsthand the challenges with the IRS’s complex procedures.
When Members asked what Congress could do to improve the Appeals process at the IRS, Chastity Wilson, Principal of the National Tax Office at CliftonLarsonAllen LLP, responded:
“We need to simplify the process … I think because it’s intimidating that taxpayers feel the only way they’re going to resolve it and win is if they engage help … we need to find a way to simplify the process, we need to find a way to make it less intimidating for the taxpayer.”
Byron Shinn, Founder and Managing Partner of Shinn & Co. – a CPA and business consulting firm in Florida – has represented taxpayers before the IRS for almost four decades. Mr. Shinn identified telephone and in-person access as key issues for some taxpayers:
“There are a lot of taxpayers out there that don’t have access. Having the opportunity to walk in and talk at the local agent office level and having that face-to-face humanizes the circumstances.”
Pete Sepp, President of the National Taxpayer Union, explained that complexity in the administrative process often deters taxpayers from trying to resolve a dispute with the IRS – even when they’re paying more in taxes than they should. In fact, currently less than 5 percent of small businesses appeal after the agency completes an audit, and as Mr. Sepp said, it’s not because the IRS has a record of being right:
“Is this apparent low frequency of disputes simply attributable to the IRS being correct in the position it takes from the vast majority of examinations? Numerous authorities, from prominent members of the tax advisory community, to the Government Accountability Office … would answer, not at all.”
In response, Rep. Jackie Walorski (R-IN) noted:
“One of the rights enshrined in the ‘Taxpayer Bill of Rights’ is: the right to pay no more than the correct amount of tax … A big reason for [the low rate of appeals] is that taxpayers believe it’s cheaper to just give up and pay the IRS than appeal. This is incredibly disheartening. If a taxpayer thinks they are paying more than they should, my advice is – absolutely fight it!”
Chairman Buchanan closed the hearing by ensuring the Ways and Means Committee’s focus on reforming the IRS into an agency that works for taxpayers – not against them – continues to be a bipartisan effort that will deliver relief for the middle class.
“I’m concerned about the person who gets the $1,000, $1,500, $2,000 small business or individual tax bill. How do we resolve that without putting them into bankruptcy or into a bad situation … This is an area we need to work on.”
The Committee will continue its efforts to hear from stakeholders about the important need for IRS reform and work across the aisle to find solutions.
CLICK HERE to learn more about today’s hearing.
CLICK HERE to read about the Committee’s hearing on Improving IRS Customer Service
CLICK HERE to read about the Committee’s annual hearing on Tax Filing Season.