National Taxpayer Advocate Quotes
The following comments are from National Taxpayer Advocate Nina Olson from her 2008 Annual Report to Congress:
On the complexity of the tax code:
- "Although few people enjoy paying taxes, most understand that “taxes are what we pay for a civilized society.” But it adds insult to injury that more than 80 percent of taxpayers today find tax filing so complicated that they feel compelled to pay transaction fees simply to pay their taxes."
On the tax consequences of cancellation of debt income or CODI (this year's "poster child" for tax code complexity):
- “This issue – which has received very little attention in the media – threatens to undermine any nascent recovery by homeowners facing loan restructuring or foreclosures, not to mention by taxpayers who find themselves unable to pay their automobile or credit card debts as a result of declining economic conditions.”
- “It is probably safe to say that taxpayers facing eviction from their homes and the resulting disruption of their financial and personal lives will not be thinking about CODI. These taxpayers and those who are able to arrange debt reduction will find, a few years down the road when they are about to achieve some measure of financial stability, that they owe the IRS a sizable sum.”
On IRS collection and enforcement actions against taxpayers undergoing hardship:
- “It is imperative for the IRS to consider the circumstances of taxpayers facing economic hardship before initiating enforcement actions.”
- “Failing to take the appropriate steps to address this economic crisis could result in the perception of the IRS using “harsh” collection tactics in troubled times, thereby, discouraging taxpayers from trying to work things out with the IRS. Conversely, the perception of a more reasonable and flexible IRS is likely to encourage more taxpayers to try.”
- "We note that the IRS’s own studies show that more enforcement actions – liens and levies – do not translate into commensurate increases in revenue collection."
On the Alternative Minimum Tax (AMT):
- “The perniciousness and invasiveness of the AMT are demonstrated by the fact that it will cost more in 2009 to repeal the AMT than it would cost to repeal the regular income tax rules and leave the AMT in place.”
On simplifying the family status provisions of the tax code:
- "The tax code’s family status provisions continue to ensnare taxpayers and make tax administration difficult simply because of the number of provisions and their structural interaction. Moreover, many of the eligibility requirements – such as support or maintenance costs of the home -- are difficult for the IRS to verify without conducting audits into taxpayers’ personal and private lives."
On reforming the penalty provisions of the code:
- "Penalties are important because of their potential to increase voluntary tax compliance and reduce the $345 billion annual tax gap. If structured improperly, however, penalties can reduce voluntary compliance, potentially endangering collection of the 84 percent of all taxes due that come in timely and voluntarily each year without any direct effort on the part of the government."
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