Hot Issues in the National Taxpayer Advocate

The Office of the Taxpayer Advocate is an independent organization within the IRS that assists taxpayers who are experiencing economic harm and also advises the IRS on issues that need to be addressed to assist and protect taxpayers. The head of the organization, Nina E. Olson, has released a report outlining top issues her office will focus on in the coming fiscal year. The top four issues are:

• Tax-related identity theft: Having the IRS create procedures to help taxpayers who have become victims. The report makes eight suggestions on how to make improvements in this area.
• Cancellation of debt income: Making sure taxpayers understand how to report the income or claim exemption for tax (e.g., for mortgage discharges related to foreclosures on a principal residence). Newly revised Form 982 must be filed for those with discharged debt that is not taxable, yet few taxpayers are aware of this requirement; outreach efforts are advised in this area.
• IRS collection practices: Addressing concerns regarding levies, allowable living expense standards, installment agreements, offers in compromise, and early intervention techniques. For instance, it is believed that IRS seizures of taxpayer assets occur before all viable collection alternatives have been exhausted. The Advocate wants to see actions taken to address these concerns.
• Private debt collectors: Monitoring the actions and effectiveness of private debt collectors (PDCs) who are authorized under certain conditions to collect federal taxes. There are concerns that PDCs are collecting less than expected and the IRS has not provided a clear reconciliation of PDC accounts (i.e., where they attempted to collect but failed, leaving accounts outstanding).

Source: IR-2008-87, 7/8/08