Baucus Fights to Keep Taxpayer Assistance Centers Open
Senator Joins Colleagues in Sending Letter to Appropriations Committee
(WASHINGTON, D.C.) U.S. Senator Max Baucus, ranking member of the Senate FinanceCommittee, led a bipartisan coalition of senators in an effort to keep Taxpayer Assistance Centers(TACs) open across Montana and the country. In a letter to Chairman Christopher Bond and RankingMember Patty Murray who lead the subcommittee responsible for Internal Revenue Service funding,Baucus emphad the important service TACs provide to Americans in meeting their tax obligations.Last April, Baucus joined fellow colleagues to provide more funds for the taxpayer service byintroducing a bill that authorized $10 million in matching grants for low- income tax preparationclinics.
Full text of the letter to Chairman Bond and Ranking Member Murray follows:
June 23, 2005
The Honorable Christopher Bond The Honorable Patty MurrayChairman, Appropriations Subcommittee on Ranking Member, Appropriations SubcommitteeTransportatio n, Treasury, the Judiciary, on Transportation, Treasury, the JudiciaryHousing and Urban Development, and Housing and Urban Development, andRelated Agenc ies Related Agencies130 Dirksen Senate Office Building 128 Dirksen Senate Office BuildingWashington, D.C. 20510 Washington, D.C. 20510
Dear Chairman Bond and Ranking Member Murray:
As you put together the Fiscal Year 2006 (FY 06) appropriation for the Internal RevenueService (IRS), we hope that you will not support the IRS’s pla nned reductions in taxpayer service,including the closure of 68 Taxpayer Assistance Centers (TACs) across the country.
In 1998, Congress sent a clear signal to the IRS. As part of the IRS Restructuring and ReformAct, Congress directed the IRS to “restate its mission to place a greater emphasis on serving the publicand meeting taxpayers’ needs.” The IRS quickly developed a new mission and IRS employeesexperienced a paradigm shift – from viewing all taxpayers as adversaries to viewing most taxpayers aspartners in the effort to ensure voluntary compliance. Unfortunately, the IRS is beginning to showsigns of retreating back into its old ways. Therefore, we believe that Congress must reinforce theimportance of quality, accessible taxpayer service – balanced with quality enforcement – through theIRS appropriation.
The IRS bases its plan to close TACs on several arguments. We believe each argument lacksmerit, as discussed below.
The IRS asserts that closure of the TACs is justified because taxpayer usage has declined.However, peering behind the curtain reveals that decreased usage appears to result largely fromlimitations the IRS itself has imposed on the capacity and service options available at the TACs asopposed to actual decreases in taxpayer desire for assistance from TACs. Specifically, the IRS hasreduced TAC capacity over the past few years through personnel reductions and limitations onavailable TAC personnel. Additionally, it is our understanding that the IRS has tur ned away manytaxpayers seeking assistance. At some sites this past filing season, we understand that lines oftaxpayers began to form hours before the TACs opened, and the IRS turned away many taxpayersseeking to comply with their tax filing obligation. Significantly, the IRS statistics of taxpayers servedby TACs do not include those taxpayers who sought assistance but were turned away. Even moretroubling, the IRS has dramatically reduced the number of tax returns that it allows its employees tohelp prepare for taxpayers at the walk- in sites. Some IRS TAC employees were told not to preparemore than 10 returns a day. At other TACs, we understand employees were told to reduce returnsprepared by 20% for each of the past two years. Finally, the IRS has placed limits on the scope ofquestions that can be answered at the TACs (e.g., instead of allowing a TAC employee to hit a fewbuttons on his or her computer to print taxpayer transcripts and give them to taxpayers while they wait,the TAC employee must now direct taxpayers to call a toll- free number to request a transcript, whichrequest typically takes two weeks to process). We should not compound these reductions in taxpayerservice by allowing these closures to proceed as planned.
GAO Told IRS to Close TACs
The IRS asserts that the Government Accountability Office (GAO) supports its decision toclose TACs. However, upon closer reading of the GAO report, it is evident that such “support” hasbeen taken out of context. Specifically, before the GAO report lists TAC closures and other possiblecost saving options, it makes the following statement: “The options on this list are notrecommendations, but are intended to contribute to a dialogue about the tradeoffs faced when settingIRS's budget.” We believe that the GAO's qualified language implies that the IRS must make a solidbusiness case for any closures. As the Treasury Inspector General for Tax Administration hasindicated (as quoted below), the IRS has not made such a case.
Taxpayers Want to Use Other Means to Communicate with IRS
Another IRS assertion is that taxpayers prefer to communicate with the IRS via the Internet ortelephone. However, the IRS has failed to produce documentation of any taxpayer- focused assessmentof taxpayers' need for face-to- face service. It is also our understanding that the IRS has not involvedstakeholders (such as tax practitioners, who also use TACs for their clients) in the decision making inany meaningful way. It is also our understanding that the IRS has not fully explored identification anddevelopment of alternative methods for providing face-to- face service. In fact, Ms. Nina Olson,National Taxpayer Advocate, reported to Congress that a Pew study found that a significant percentageof individuals prefer face-to- face service when seeking assistance from the government. Further, Mr.Russell George, Treasury Inspector General for Tax Administration, stated in testimony before theFinance Committee: “I am skeptical that the IRS has adequate data to assess the impact that closingthese centers will have on customer service. I am also concerned that the IRS has insufficient data todraw conclusions on the likelihood that taxpayers, who have used these centers in the past, will be ableto use other methods of seeking help, such as the Internet or telephone.” While we should welcomeuse of the Internet to reach more taxpayers, there is little evidence that taxpayers do not want thepersonal service afforded to them by TAC personnel.
IRS Lacks Research Regarding Impact of Taxpayer Service on Compliance
The IRS’s decision to cut taxpayer service in general and close TACs in particular appears tobe based on the notion that overall compliance will only improve if the next dollar is spent onenforcement. In other words, it believes that a dollar spent on enforcement will do more to increasecompliance than a dollar spent on taxpayer outreach and assistance. However, the IRS lacks researchregarding either the impact of taxpayer service on compliance or the indirect revenue gains achievedthrough enforcement expenditures. As such, it is just as plausible to make the case that the closure ofTACs, elimination of electronic tax law assistance, elimination of TeleFile, and other taxpayer servicecuts may lead to reduced compliance even if enforcement spending is increased. CommissionerEverson is fond of saying that “service + enforcement = compliance.” However, Ms. Nina Olson,National Taxpayer Advocate, has pointed out: “Unfortunately, the IRS's equation doesn't tell us whatis the optimal mix between service and enforcement, because each of the equation's elements is avariable. For example, if we reduce service, there is no guarantee - no matter how much we increaseour enforcement efforts - that compliance will increase overall. Indeed, it is entirely possible that anincrease in enforcement initiatives, offset by a decrease in taxpayer service, would result in lesscompliance. The IRS's current approach reflects the view that enforcement activity should beincreased while taxpayer service is reduced. Is that the right answer? And within enforcement, whereare our dollars best targeted? The truth is that we have no idea.” We are concerned that, if we reducetaxpayer service by eliminating nearly 20% of the TACs, the Commissioner’s formula actuallysuggests a reduction in compliance – and it will undoubtedly lead to millions of taxpayers who are notbeing well- served by their government.
* * * * * * *
We appreciate the opportunity to express our concerns regarding the IRS’s planned cuts in taxpayerservice and closure of Taxpayer Assistance Centers. Each year, millions of Americans strive tocomply with a complicated tax code that is not of their making. It is incumbent upon the Federalgovernment to provide quality, accessible assistance to every taxpayer who is trying to honestlycomply with the law. A failure to do so simply breeds disrespect and encourages noncompliance. Ournation cannot afford such a path.
Senator Max Baucus (D-MT)
Senator Olympia Snowe (R-ME)
Senator John Rockefeller (D-WV)
Senator Orrin Hatch (R-UT)
Senator John Kerry (D-MA)
Senator Norm Coleman (R-MN)
Senator Larry Craig (R-ID)
Senator Mark Pryor (D-AR)
Senator Hillary Clinton (D-NY)
Senator Christopher Dodd (D-CT)
Senator Frank Lautenberg (D-NJ)
Senator Jack Reed (D-RI)
Senator Tim Johnson (D-SD)
Senator Daniel Akaka (D-HI)
Senator Barbara Mikulski (D-MD)
Senator Paul Sarbanes (D-MD)
Senator Jeff Bingaman (D-NM)
Senator James Jeffords (I-VT)
Senator Charles Schumer (D-NY)
Senator Mark Dayton (D-MN)
Senator Jon Corzine (D-NJ)
Senator Patrick Leahy (D-VT)
Senator Evan Bayh (D-IN)
Senator Herb Kohl (D-WI)
Senator Susan Collins (R-ME)
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