The IRS Mess: Taxpayer’s Roadmap is a Plumber’s Nightmare

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By Rick Telberg / CPA Trendlines

Every year, the Taxpayer Advocate Service, an independent agency within the Internal Revenue Service, issues a report to Congress on the 20 most serious problems taxpayers face in trying to fulfill their patriotic duty to fund their nation.

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Taxpayer Advocate Nina E. Olson, who just this year announced her retirement from the agency, notes that identifying the 20 problems that are most serious is not objectively possible or even desirable. Sometimes, for example, the problems are the same as those of previous years, so the legislated mandate allows for subjective decisions about what to include.

Sometimes the service selects problems based on a theme or grouping of issues. This year, many of the problems are arranged around a “Taxpayer’s Journey”—the myriad and almost uncountable obstacles and detours a taxpayer can face in an honest attempt to pay all due taxes.

Journey? Odyssey may be a better word. The report lays out several “roadmaps” in the form of flow charts that would be a plumber’s nightmare. The maps go on for seven pages.

“One of our goals in creating these roadmaps was to help readers understand the complexity of the taxpayer journey,” Olson writes, referring to readers in Congress, the IRS, and other interested parties. “It was challenging for us to create these roadmaps and it will probably be difficult for readers to follow them, which hints at the extreme frustration many taxpayers experience when they must interact with the IRS. IRS employees also experience that a frustration as they try to navigate the system. For every step shown on the roadmaps, I note there are multiple sub-steps and detours that we did not represent, for fear of getting ourselves and everyone else completely lost.”

Tax practitioners will see the roadmap as a Dantesque tour through the bowels of the beast. The first page of the map, on Tax Return Preparation, starts out simply enough as the taxpayer gathers tax information, then seeks answers to questions. From there, the flowchart branches into six sources of answers. Assuming the sources pan out, the taxpayer prepares the return, stepping into any of five options, one of which is a paid return preparer.

The second page, Tax Return Processing, gets a little more complicated, with more sub-steps and loop-backs.

The third page, Notices, details the many detours through math errors, abatement requests, taxpayer protests, appeals conferences, determination letters, tax court, and decision letters.

Exams have their own flowchart, as do Appeals.

And then there’s the page on Collections. This is the one with pipelines in four colors, some with arrows pointing both forward and backward. And no apparent end-point. And in inset map for Collection Alternatives. The complexity almost seems designed to prevent rather than facilitate collections.

And that’s not all! Turn the page. There’s one more map, the one nobody wants to see. It’s called “Litigation.”

As dizzying as it is, the roadmap is really a brilliant device for organizing 20 serious problems and illustrating their seriousness. Throughout the report, the problems and associated recommendations are grouped in accordance with the pages of the roadmap. Solving the problems won’t make the maps a whole lot simpler, but at least some of the roadblocks would be removed. At least there might be hope.