Taxing Agency Errors

[erchess]

We are all frustrated by the errors taxing agencies make. I want to see what people think can realistically be done about the problem given that there is only so much money available for government to spend on all its priorities and on this one in particular and given that only humans and not angels of deities are available to run the agencies.
Choose only one option.

[Jiggers]

What about increasing the education level of the taxing agency's employees? We are required to have CPE for the preparation of returns that we send them, do they have the same level of education if they are reviewing those returns?

What is being done to eliminate those tax agency's employees who consistently make mistakes?

[WhiteOleander]

What about increasing the education level of the taxing agency's employees? We are required to have CPE for the preparation of returns that we send them, do they have the same level of education if they are reviewing those returns?

What is being done to eliminate those tax agency's employees who consistently make mistakes?

These are my thoughts also. I have been frustrated many times because the agent I was talking to did not know even the basic law. One time I asked the agent to refer, with me, to a certain page in Pub. 17. She said she didn't have one. They weren't allowed to refer to that.

[Super Mom]

Yes, it makes perfect sense that they should have the same education requirements that will be imposed on us!!

[ChEAr$]

it's a beautiful day here in Dixie. I just got off the phone with a Mr Colon..na... in Philadelphia of all places and he actually knew what section 1341 was all about.
Furthermore, when i told him I would have to hang up the phone in order to fax him a couple of pages, he said "wait, stay on the line. I don't want to lose you."

Miracle of miracles, he took my verbal information and reinstated the credit which had been taken off on a CP11.

he sounded like he had been around a while, so I would say it's more training the telephone assisters need. In fairness of course, ordinary taxpayers don't get to talk to people like him since he works on our hotline service.

[dtlee]

I think there is a general push among all governments to do things faster not better (perhaps that should be all organizations, but I digress). I had a client who had an item questioned and we provided the necessary documentation to close the issue. The next response from the IRS asked for more than double the original balance due. Why? Because somehow the itemized deduction for mortgage interest was deleted from the return (totally unrelated to the original issue).

Was that a keying error where the person who made the change was rushed or poorly trained? Was that a situation where changes which were previously reviewed by a second person are now allowed to go through unreviewed due to budget cuts or productivity demands? Was that a problem with a faulty computer system which was coded under tight timeframes or insufficiently tested? I have no idea.

I do not know how to have a valid opinion in this poll until I find out why these things happen.

When I called the IRS, I got a knowledgeable, rational person on the other end who said, "Give me a minute please to look at what is going on. (significant pause) What the heck did they do here?" I responded that she was stealing my lines, but we went on to easily correct the matter. She did not have any explanation for why the screen for itemized deductions would have even been accessed in resolving the original issue.

I do not think the current error rate is the best we can do. Increased funding will only lead to increased attempts to recover money (to pay for that funding) in the guise of preparer penalties or erroneous notices of additional tax due (such incidents in the past have shown that the majority of taxpayers will simply pay an amount due if it is a few hundred dollars). Increasing what we submit to them would not necessarily help unless they have computer systems or procedures in place to actually use the information and it would be a burden on preparers (don't we have enough that we submit already?).

Perhaps there needs to be a penalty they pay to a taxpayer for a truly erroneous notice where their mistakes cost them real dollars. However, that would reduce their willingness to accept the error as theirs until irrefutable evidence is provided. In my scenario, the Mortgage Interest was never in question originally, but if they now accidentally added it, I could imagine a prolonged period of documentation (requiring not only mortgage statements but deeds and proof of use as a primary residence). I would not want to go through that.

I am interested in what other people think the solution is. Only when we have competent individuals doing work in a realistic timeframe with proper review and oversight can this process be improved. That is not likely in governments which are trying to cut costs.

[David1980]

Yes, it makes perfect sense that they should have the same education requirements that will be imposed on us!!

Honestly, requirements to preparer returns seem pretty low. Take what appears will be a very basic very easy test and pay your PTIN fee? Don't most jobs at the IRS require a bachelor's degree?

[Jiggers]

Honestly, requirements to preparer returns seem pretty low. Take what appears will be a very basic very easy test and pay your PTIN fee? Don't most jobs at the IRS require a bachelor's degree?

A bachelor's degree doesn't many anything when it comes to preparation of income taxes.

All of my education regarding preparation of income taxes comes from experience in working for CPA firms and now being self-employed.

[David1980]

Sure, absolutely, a bachelor's degree doesn't mean you know much of anything (as proven by the bad experiences we have when we call the IRS.)

But to say the IRS should have at least the same education requirements we do... I would argue that the test, although we have not seen it yet, is much less than the degree. That while a bachelor's degree doesn't mean much, that the test we're going to have to pass (unless exempted due to EA/CPA/whatever) means even less.

Certainly there's still going to be preparers who can pass the test who cannot understand the difference between a refundable or a non-refundable credit and so on.

[taxdude71]

I agree that the phone operators at the IRS should have basic tax knowledge. Many times I have talked to someone only to ask for a supervisor when it becomes obvious the person I'm speaking with is just there to get people to pay.

I think a large number of issues would be resolved if the IRS would review all correspondence before it is mailed to the taxpayer. I've had a number of issues regarding automated letters that were so obviously wrong that could have been corrected before the IRS mailed them.

[Nashville]

Accountability

I think all the above suggestions would correct themselves if the IRS had to be accountable for its own errors and lack of knowledge. When I say accountable, this is just a fluff of words unless you can reduce it to dollars and cents.

In case you haven't experienced it, the IRS regards penalties NOT as a punishment for some wrongdoing, but instead as just another source of revenue. If they were in error and required to pay the same penalty they had planned on assessing the taxpayer, they would all be more knowledgeable, higher levels of training, more and relevant funding for service, and all of the aforementioned that has been offerred.

I think most of us (and the general public as well) would be happy to sacrifice a 1/2% increase in the tax brackets to accommodate the change. IOW, a 25% tax bracket would become a 25.5% tax bracket, in order to pay for the IRS having to refund the same degree of penalty they would charge the taxpayer for the same error.

[erchess]

I guess I'm madder than Nashville

but I want to put the government between a rock and a hard place when it comes to asking taxpayers for more money. On the one hand if the taxpayer responds by paying, then they should be untouchable for all returns filed previous to the payment. Right the payment not the notice. On the other hand, if the taxpayer can create reasonable doubt as to one penny of what is asked for not only do they not have to pay anything at all but they are free of all taxes for 50 years and their freedom is freely transferable so that for example they could sell it to GM. The point is to make even one wrong notice something the government can't afford.

[Nashville]

Addendum

When I say accountable, this is just a fluff of words unless you can reduce it to dollars and cents

I have to say more about government solutions and political rhetoric. Not often, but a few times in my career there have been attempts at a "kinder, gentler IRS."

Instead of reducing accountability to dollars and cents, here are a few ideas that the bureaucrats would define as "accountable."

1. Congress will appoint an "oversight committee" which will create jobs to pay people [sic] to read excerpts about customer complaints. The complaints will come from the coffers of the IRS and not from letters to Congress.
2. The IRS can become more accountable by implementing annual employee reviews. Taxpayer complaints will be taken into account, but no IRS employee will need give any information other than their employee #. Primary performance review will be by taxes collected and, at a higher level, court cases won.
3. The Commissioner will be called upon to give an annual report to the Treasury Dept and accountability must be addressed in his speech.
4. More clauses will be added to the politically popular "TaxPayers' Bill of Rights." Boy, won't that strike terror in the hearts of the IRS!! Clauses describing the ethereal benefits of accountability will join other earthshaking clauses such that "taxpayers have a right to know exactly what their tax bill is."

Rejoice, weary tax practitioners!! With the above landmark solutions available, we can expect a much improved workforce when dealing with IRS.

[veritas]

simplfy the tax code

Eliminate the myriad of tax loopholes for everyone. Lower the tax brackets.

[erchess]

Two Problems with simplification

Number one the users of this board don't like it because there would be more self preparers. Number two it is not politically feasible because everyone wants to keep their deductions and credits and eliminate the ones they do not qualify for.