Spring • June 2016 • Vol. 35 No. 3
LET’S CONFER
National Taxpayer Advocate Holds Public Forum to
Discuss IRS Future State
By Derek B. Wagner, Pro Bono Counsel, ABA Section of Taxation
In her 2015 Annual Report to Congress, National Taxpayer Advocate (NTA) Nina E. Olson raised concerns
about the IRS’s comprehensive “Future State” plan to overhaul agency operations as it adapts to an
environment of constrained funding and expanding responsibilities.1 A central component of this Future
State plan is to transition from relatively costly telephone and face-to-face interaction with taxpayers to
online taxpayer accounts as the primary means of interaction.2 Although the NTA praised many of the IRS’s
goals as laudable, she expressed concern that the IRS had not adequately disclosed its plans or solicited
input from taxpayers and tax professionals.3 She also questioned whether the IRS would be able to achieve
the desired level of cost-saving while still meeting taxpayer needs. In response, she announced a series of
public forums around the country to permit taxpayers and tax professionals to comment on the IRS Future
State. 4
The first of these public forums was held at the IRS Headquarters in Washington, DC, on February 23,
2016. The forum featured three panels, each followed by a question-and-answer session with the NTA and
questions from the audience.5
Ms. Olson applauded efforts by the IRS to improve the tax administration system, but emphasized two critically important and interrelated items that the IRS should bear in mind in
designing its future state: opening the design process to the public and working to build trust.
Panel #1
The first panel featured Pamela F. Olson, Washington National Tax Services Practices Leader at
PricewaterhouseCoopers, and Leslie Book, Professor of Law at Villanova University Law School. Both
1 See Most Serious Problem #1: Taxpayer Service: The IRS Has Developed a Comprehensive “Future State” Plan That Aims to
Transform the Way It Interacts With Taxpayers, But Its Plan May Leave Critical Needs and Preferences Unmet, in Nat’l Taxpayer Advocate
Serv., 2015 Annual Report to Congress, vol. 1, 3-13.
2 Id. at 3-5; see also Preface, Nat’l Taxpayer Advocate Serv., 2015 Annual Report to Congress, vol. 1, xii.
3 Id. at viii.
4 Id. at xv.
5
In advance of the forum, the IRS posted additional information concerning its Future State plans on its website.
Published in ABA Tax Times, June 2016. © 2016 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or
disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. ISSN 2381-5868.
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ABA TAX TIMES
Spring • June 2016 • Vol. 35 No. 3
panelists discussed the importance of openness and public trust in designing the Future State, but each from
a different perspective. Ms. Olson’s remarks focused on corporate taxpayers and the planned reorganization
of the IRS Large Business and International (LB&I) division. Ms. Olson applauded efforts by the IRS to
improve the tax administration system, but emphasized two critically important and interrelated items that
the IRS should bear in mind in designing its future state: opening the design process to the public and
working to build trust. The distrust and suspicion that the IRS and taxpayers often exhibit toward each
other could impede the success of the reorganization of LB&I. She called for more collaboration between
the IRS and the taxpayer and tax professional communities to improve the tax administration system.
Focusing on the experiences of lower-income taxpayers within the system, Professor Book’s remarks also
emphasized the importance of trust in tax administration. He called for acknowledgement of the trend
for the IRS as the primary administrator of a growing list of federal benefits. Because of that role, it is
imperative that the IRS bear in mind the particular kinds of challenges and limitations that low-income
taxpayers face.
Among the primary issues the panelists discussed were the threat of identity theft and other online security concerns, the decline in taxpayer service, and
the need for clear and up-front guidance on emerging issues. Each of these matters is worsened by the ongoing budget constraints under which the IRS operates.
Panel #2
The second panel featured representatives from various IRS advisory committees, including Jennifer
MacMillan and Timothy McCormally, chair and vice chair, respectively, of the Internal Revenue Service
Advisory Committee (IRSAC); Michael Gangwer, chair of the Information Reporting Program Advisory
Committee (IRPAC); Jim Buttonow, chair of the Electronic Tax Administration Advisory Committee (ETAAC);
and Gina Jones, chair of the Taxpayer Advocacy Panel (TAP).
Each of the panelists spoke favorably of the IRS’s plans to improve administrative efficiency and agreed
that expanding digital services for taxpayers is a much-needed step. That said, panelists found a number
of matters of concern facing the IRS. Among the primary issues the panelists discussed were the threat of
identity theft and other online security concerns, the decline in taxpayer service, and the need for clear and
up-front guidance on emerging issues. Each of these matters is worsened by the ongoing budget constraints
under which the IRS operates.
Panel #3
The third and final panel of the day, made up of individuals from outside the tax profession, focused on social
science research that may shed light on the behaviors and attitudes of taxpayers and tax professionals.
Michael Best, Senior Policy Advocate at the Consumer Federation of America, discussed recent research
regarding public views on paid tax-preparers. As most will recall, in 2014 the D.C. Circuit Court in Loving
affirmed the District Court’s holding that a Circular 230 regulation requiring testing and registration for paid
tax-return preparers was not authorized under the 1884 statute that authorizes the agency to “regulate the
Published in ABA Tax Times, June 2016. © 2016 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or
disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. ISSN 2381-5868.
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ABA TAX TIMES
Spring • June 2016 • Vol. 35 No. 3
practice of representatives of persons before the Department of the Treasury.” Congress has so far refused
to legislate a remedy. This creates a quandary: many taxpayers utilize paid return preparers, but there is
a quite high error-rate in those prepared tax returns. Mr. Best called for federal or state oversight of paid
return preparers to protect consumers from errors and fraud.
Aaron W. Smith, Associate Director of the Pew Research Center’s Internet Project, reported on American
adults’ internet usage and access. Research indicates that 15% of American adults do not use the internet
from any location or device. Two-thirds of Americans have access to a dedicated, high-speed home internet
subscription, but broadband adoption has slowed in recent years. Among non-broadband users, cost factors
are the most common reason for not subscribing to home internet. Many of these individuals rely primarily
on a smartphone to access the internet, but such reliance can make many tasks—such as applying for a
job or filing a tax return—challenging.
Arturo Gonzalez, Chief, Consumer & Community Development Research, Division of Consumer and
Community Affairs, Board of Governors, Federal Reserve, discussed a March 2016 Federal Reserve
report on consumers’ use of mobile financial services. Mobile banking use continues to rise. Among other
findings, however, the surveys discovered that banking customers continue to rely—either exclusively or in
conjunction with mobile banking—on traditional brick-and-mortar banks and ATMs. These findings suggest
that banking customers prefer in-person interaction, even when online accounts are readily available.
All of the panelists’ materials are available online on the Taxpayer Advocate Service website at http://www.
taxpayeradvocate.irs.gov/news/nta-forum-wdc. Information about subsequent and future public forums can
be found at http://www.taxpayeradvocate.irs.gov/public-forums. ■
Published in ABA Tax Times, June 2016. © 2016 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or
disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. ISSN 2381-5868.
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