At a May 5 Taxpayer Advocate Service forum in Red Oak, Iowa, a panel including Senate Finance Committee member Sen. Chuck Grassley (R-IA) and National Taxpayer Advocate Nina Olson, discussed how the IRS can better assist taxpayers.
“Taxpayers work hard to fulfill their tax obligations,” Grassley said. “The IRS needs to work just as hard to help people do that. When taxpayers have questions, the IRS needs to answer them.”
This was the sixth in a series of forums organized by Olson to discuss the IRS’s future vision for placing most taxpayer service functions online. A number of the panelists voiced concern that IRS plans deemphasize customer service in favor of more funding for examinations and collections.
“America’s taxpayers just want someone to help them…They just want to file a tax return, better understand a letter or notice they have received so that they can appropriately respond, or get a question answered by a real, live person,” said Kristy Maitre of Iowa State University.
Tamara Borland, Director of Iowa Legal Aid’s Low-Income Taxpayer Clinic noted, “My most successful interactions with the IRS have been personal interactions with staff where a dialogue helps to clarify and resolve a situation quickly. My least effective interactions have been with inefficient systems where mail is lost or not properly logged or directed, long times are spent on hold to then be supplied incorrect or incomplete information from poorly trained or poorly informed staff.”
Editor’s Note: American taxpayers are frustrated. The tax code is complicated, tax preparers may not be knowledgeable and many taxpayers are left with unanswered questions about how to complete their annual returns. Hopefully, these forums will be illuminating to the IRS as it reinvents its customer service model for the future.
IRS Plans to Hire Hundreds of Employees
The IRS announced plans this week to hire between 600 and 700 new employees. In a memo to agency employees, IRS Commissioner John A. Koskinen noted that that a key element in the decision to hire more personnel is the large number of retirements and attrition among enforcement personnel.
Since 2010, the IRS has faced budget cuts and lost more than 5,000 enforcement-related jobs. Koskinen noted, “In previous years, job losses across the agency have helped us absorb the funding cuts we have received, but left us with large gaps in various areas across the agency.”
In December of 2015, Congress agreed to add $290 million to the IRS’s budget of 2016 for a total of $11.23 billion. However, these budget increases were directed toward improving taxpayer service, combatting identity theft and improving cybersecurity, not enforcement.
Koskinen said, “To serve taxpayers and the nation’s tax system, we clearly need more people to improve the taxpayer experience as well as our employee’s experience. Koskinen anticipates a second wave of IRS hiring later in the year.
Editor’s Note: The hiring of more IRS revenue agents and other enforcement personnel increases the likelihood of personal and corporate taxpayer audits. A recent analysis of tax records by Syracuse University showed a significant decline over the last five years in the audit rate of business taxpayers, in particular. The new hiring represents the most notable move by the IRS to increase enforcement efforts in over a decade.
New Bill Encourages Charity Transparency
On April 18, Rep. Dina Titus (D-NV) introduced the Strengthening Charities Through Transparency Act of 2016. The bill is designed to increase charity transparency by requiring exempt organizations to make annual returns more readily available to the public and disclose improper conduct by the charity and/or its management.
Specifically, the Strengthening Charities Through Transparency Act would:
- Require charities to submit Form 990 in an electronic format. Charities are already required to make 990s publicly available, but given the option to submit these forms electronically.
- Require the IRS to release a digitized copy of the 990 whenever it would have been legally required to release a paper copy of the 990. Currently, the IRS only releases non-searchable copies of these forms.
- Require the Department of Justice to establish a searchable database for disclosure of charities and charity management officials who are convicted of fraud, theft, or financial crimes. The Department of Justice would maintain this list based on information submitted from state agencies.
Titus issued a statement in support of the Act noting, “As Americans finish filing their taxes and begin collecting deduction receipts for next year, it’s important they know that the organizations they are donating to are legitimately helping those they claim to serve.”
Titus went on to state, “My bill will improve state regulation and help generous Americans make informed decisions so that they can know that their hard earned dollars will be well spent serving those who need our help.”
Editor’s Note: This is a classic bill aimed at instituting nonprofit accountability. Your editor takes no position on this Act. Most charities in America are acting in good faith, pursuing their charitable mission, and should be commended for acting responsibly. Nonprofit accountability bills continue to be introduced because donors want to know that their gifts are being used to further the causes that mean the most to them.
Applicable Federal Rate of 1.8% for May—Rev. Rul. 2016-11; 2016-19 IRB 1 (18 Apr 2016)
The IRS has announced the Applicable Federal Rate (AFR) for May of 2016. The AFR under Section 7520 for the month of May will be 1.8%. The rates for April of 1.8% or March of 1.8% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2016, pooled income funds in existence less than three tax years must use a 1.2% deemed rate of return. Federal rates are available by clicking here.
