By Brant Goldwyn and Jeff Carlson, CCH Washington Staff Writers
While the Internal Revenue Service has abandoned plans for one controversial program, another one has some lawmakers in Congress demanding for change.
The IRS had planned to cut back on the number of live-person telephone help services available for taxpayers by closing 68 Taxpayer Assistance Centers, trying to move more activity to the irs.gov web site instead. Congress strongly criticized the IRS's plans and, in the 2006 Treasury-Transportation Appropriations bill, directed the IRS not to make cutbacks in taxpayer service until the treasury inspector general for tax administration had studied their impact. Despite the congressional directive, the IRS subsequently announced it would reduce telephone service by 20 percent, from 75 to 60 hours per week.
Government union groups objected, with the National Treasury Employees Union saying the cuts are part of an effort to reduce service from IRS employees and to increase taxpayer use of the IRS web site for help. "NTEU will continue to thwart and resist anti-taxpayer actions by IRS leadership," NTEU President Colleen Kelley said in a statement. "Good riddance to this ill-conceived plan that would have made it more difficult for taxpayers to voluntarily comply with their tax obligations.
The NTEU represents 150,000 federal employees, including 94,000 from the IRS.
Meanwhile, Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) turned his attention during the week of January 16 to the IRS and the latest controversy over a tax fraud detection program.
Grassley along with some Senate Democrats reacted strongly to a report from National Taxpayer Advocate Nina Olson who faulted the IRS' refund fraud detection program in her annual report of the worst problems facing taxpayers. Olson said the IRS freezes tens of thousands of tax refunds it deems questionable every year without telling taxpayers that they're suspected of fraud.
In a January 19 letter to Treasury Secretary John Snow, Grassley urged the Treasury secretary to make some quick changes: "Taxpayers have a right to expect the federal government to provide them timely notice that they will not receive a refund and inform the taxpayer of their opportunities for redress. I strongly urge you to take immediate steps to provide taxpayers notice within 90 days of an action that freezes a refund."
Grassley suggested that the taxpayer advocate, criminal investigation and the treasury inspector general for tax administration make it a priority to meet and formulate reforms that will improve the likelihood that the Questionable Refund Program (QRP) is not unduly burdening innocent taxpayers and is more likely going to capture the tax cheats.
In a separate letter to Snow, Senate Minority Leader Harry Reid (D-Nev.), Senate Finance Committee ranking member Max Baucus (D-Mont.), and Senate Appropriations Committee Member Patty Murray (D-Wash.) expressed similar concerns, noting that the IRS freezes refunds of many low-income taxpayers for long periods of time without telling them why, and that the program is not particularly efficient at identifying fraudulent returns.
"It should be noted that the treasury inspector general for tax administration has conducted several reviews of the QRP in recent years and reached similar conclusions," they wrote. "These reports indicate that hundreds of thousands of Americans may not be receiving the tax refunds to which they are legally entitled. More troubling is the suggestion by the taxpayer advocate that she believes taxpayer rights are being violated."
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Added to the news on January 30, 2006.
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