The National Taxpayer Advocate Report

The National Taxpayer Advocate (NTA) is an independent organization within the Internal Revenue Service (IRS) that works to ensure that taxpayers are treated fairly and receive efficient service. Each year, the NTA submits a report to Congress highlighting the most pressing issues faced by taxpayers and recommending solutions. This report summarizes the key findings of the National Taxpayer Advocate Report to Congress for 2023.

What is the National Taxpayer Advocate Report to Congress?

This report is a critical tool for informing Congress about the experiences of taxpayers interacting with the IRS. It identifies the ten most serious problems (MSPs) that taxpayers encounter.

The report proposes administrative and legislative recommendations to address these problems. All in all, this report serves as a vital resource for taxpayers, tax professionals, and policymakers seeking to understand and improve the tax administration system.

2023: A Year of Transition

2023 marked a year of significant transition for the IRS and taxpayers. While the IRS made strides in recovering from the challenges of the COVID-19 pandemic, some longstanding issues continue to create difficulties for taxpayers.

Positive Developments:

  • The IRS largely eliminated the backlog of unprocessed tax returns and correspondence.
  • Refund processing times returned to pre-pandemic levels.
  • Telephone answer rates improved, with taxpayers experiencing wait times similar to pre-pandemic periods.

Areas for Improvement:

  • Paper processing remains a major bottleneck, causing delays for taxpayers who file paper returns or require paper correspondence with the IRS.
  • The IRS continues to face challenges in attracting, hiring, and retaining qualified staff.

Recommendations from the National Taxpayer Advocate

The report outlines several recommendations for the IRS to address the identified problems. Here are some key areas for improvement:

A. Modernize Technology: Invest in modernizing IRS technology infrastructure to reduce paper reliance and improve processing efficiency.

B. Enhance Online Services: Prioritize improving online account functionality for both individual and business taxpayers, offering similar features as private financial institutions.

C. Staffing and Training: Focus on attracting, hiring, and retaining qualified personnel, with an emphasis on training customer-facing employees.

10 Key Taxpayer Challenges in 2023

1. Paper Processing Delays: Despite improvements, significant delays persist in processing paper tax returns and correspondence. The report emphasizes the need for the IRS to modernize its systems and invest in digital solutions.

2. Examination and Appeals Delays: Audits and appeals processes continue to experience extensive backlogs, causing hardship for taxpayers facing tax assessments and collection actions. The NTA advocates for increased staffing and improved efficiency within the IRS Examination and Appeals divisions.

3. Identity Theft: Taxpayer identity theft remains a serious concern, leading to fraudulent tax returns and stolen refunds. This report urges increased efforts to combat identity theft and improve taxpayer protections.

4. Unaffordable Representation: Many taxpayers facing IRS disputes cannot afford legal representation. The report calls for increased funding for Low Income Taxpayer Clinics (LITCs) and streamlined procedures for pro se (self-represented) taxpayers.

5. Electronic Filing Issues: While the IRS promotes electronic filing, taxpayers continue to encounter problems with online systems and e-filing glitches. Standardization and user-friendly design are crucial improvements recommended by the NTA.

6. Telephone Access and Service: Limited phone access and long wait times for IRS assistance remain frustrating hurdles for taxpayers. The report encourages the IRS to expand call center capacity and offer better service options for taxpayers seeking help.

7. First Contact Resolution: The report highlights the importance of resolving taxpayer issues on the first attempt to prevent frustration and delays. Improved training for IRS customer service representatives and streamlined procedures are key recommendations.

8. Error Notices and Incorrect Balances: Taxpayers frequently receive confusing or erroneous notices from the IRS. The report emphasizes the need for clearer communication and improved accuracy in IRS data systems.

9. Offer in Compromise Program Challenges: The Offer in Compromise program allows taxpayers facing tax debt to settle for a lower amount. The NTA recommends streamlining this program and making it more accessible to taxpayers in hardship situations.

10. Data Security and Privacy Concerns: The report recognizes the importance of safeguarding taxpayer data and ensuring privacy. The NTA recommends ongoing efforts to strengthen cybersecurity measures and protect taxpayer information.

What is the National Taxpayer Advocate Report to Congress?

This report is an annual assessment of taxpayer issues with the IRS. It identifies the ten most serious problems taxpayers encounter and proposes solutions to improve the tax filing and resolution process.

Why are there delays in processing my tax return or refund?

Paper processing backlogs were a major issue during the pandemic, but have largely been resolved. However, delays can still occur due to errors, complex returns, or identity theft concerns.

How can I access the full report?

You can access the full report attached below.