INSIGHTS AND RESOURCES

Taxpayer Advocate Service struggles with a backlog of cases

TAX ALERT  | 

Authored by RSM US LLP


The Taxpayer Advocate Service (TAS) is wrestling with a backlog of cases as it deals with an increased amount of requests for assistance due to severe delays at the Internal Revenue Service (IRS). 

The TAS is an independent organization within the IRS and its job is to assist taxpayers with resolution of those problems that taxpayers are unable to resolve with the IRS. In a blog post last week, Erin Collins, the National Taxpayer Advocate, said that TAS is expected to receive more than 253,000 cases in 2021—a more than 50% increase from fiscal year 2017. The growing caseload is exacerbated by the declining number of employees. Due to budgetary constraints, TAS ended the first half of 2021 with approximately 10% fewer employees when compared to 2017. TAS is also grasping to handle more than 20,000 phone calls each week. On average, taxpayers are on hold for 80 minutes to speak to an intake advocate.

The organization implores Congress to increase funding for both the IRS and TAS. The organization reported that delays at the IRS trickledown to TAS because the organization collaborates with the IRS’ business units to resolve cases. Also, delays in processing taxpayers’ amended or original tax returns and refund claims add to the volume of cases that taxpayers seek TAS assistance to expedite.  

In addition, taxpayer problems with net operating loss carryback claims have significantly increased and become a major subject area contributing to TAS’s increased workload. By statute, the IRS has 90 days to process tentative carryback claims (Forms 1139 for businesses and Forms 1045 for individuals and Trusts). However, Government Accountability Office (GAO) reports that as of May 20, 2021, the average time for processing such claims was 154 days, significantly exceeding the statutory limit. The delay is due to IRS facilities operating at reduced capacity to accommodate social distancing guidelines. 

The same GAO report states that at the end of the 2021 tax filing season, the IRS had approximately 25.5 million unprocessed returns, including 1.2 million returns from its 2020 tax season. As a result, taxpayers are experiencing delays in obtaining status updates about their tax returns and tax refunds. Thus, more taxpayers are turning to TAS for assistance, which causes considerable delays with responses at the organization. 

TAS accepts cases that fall into one of the four categories:

  • ‘Economic burden’ cases that involve financial burden to the taxpayer. These are those situations where the taxpayer is suffering or will suffer economic harm; the taxpayer is facing an adverse action; the taxpayer will incur significant cost or suffer irreparable injury if relief is not granted. I.R.M 13.1.7.2.1 (02-04-2015);  
  • ‘Systemic burden’ cases that involve the failure of the IRS system, process, or procedure. As a result, the IRS fails to timely resolve the taxpayer issue. These cases usually entail the taxpayer not receiving a response or a resolution by the date promised or the taxpayer is experiencing more than 30 days delay regarding a tax account problem. I.R.M 13.1.7.2.2 (02-04-2015);
  • The ‘best interest of the taxpayer’ cases I.R.M 13.1.7.2.3 (02-04-2015). TAS will accept cases to ensure the taxpayers are provided a fair and equitable treatment. This category should only be used when the case does not fit into any other categories; and 
  • The ‘Public policy’ cases. These are the cases that have compelling public policies to warrant assistance from TAS. I.R.M 13.1.7.2.4 (02-04-2015). 

Takeaways: 

Taxpayers should expect significant delays when contacting Taxpayer Advocate Service for assistance with their tax issues. For questions about this alert or any other tax controversy questions, please contact a member of RSM’s Tax Controversy Team.

Let's Talk!

Call us at +1 213.873.1700, email us at solutions@vasquezcpa.com or fill out the form below and we'll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

This article was written by Alina Solodchikova, Evan Stone, Truong Do and originally appeared on 2021-09-14.
2021 RSM US LLP. All rights reserved.
https://rsmus.com/what-we-do/services/tax/federal-tax/tax-controversy/taxpayer-advocate-service-struggles-with-a-backlog-of-cases.html

The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.

​Vasquez & Company LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.

For more information on how ​Vasquez & Company LLP can assist you, please call +1 213.873.1700.

Subscribe to receive important updates from our Insights and Resources.

  • Should be Empty: