The Internal Revenue Service (IRS) recently announced that it updated the Dirty Dozen, the agency’s list of consumer alerts for scams designed to target innocent taxpayers with fraudulent schemes. Historically, the list included obviously illegal plots to defraud taxpayers in various ways, including IRS impersonation scams, email attacks, ID theft, and Social Security Numbers, etc.

The news release announcing a change to the Dirty Dozen list goes well beyond merely alerting taxpayers to illegal schemes. The statement blatantly encourages citizens to avoid consulting counsel with regard to a delinquent tax problem.

Is the IRS attempting to chill one’s constitutional right to counsel?

For reference, there are millions of people facing assessments of unpaid taxes. When such assessments are not immediately paid, citizens face enforced collection, including wage and bank levies, property seizures and tax liens. These citizens also face the assessment of penalties and interest, which often double or triple the amount of the original tax.

Most people are unaware of the various programs available to mitigate enforcement action and in certain cases, reduce or eliminate one’s debt. Such programs include, among other things, an installment agreement, penalty abatement relief, audit reconsideration appeals, etc.

The IRS’s flagship settlement program is known as the Offer in Compromise (OIC). An OIC allows a qualifying citizen to reduce one’s tax debt in any one of four circumstances. Most commonly, an OIC is used when the tax cannot be paid due to lack of sufficient income or equity in assets.

This is the program the IRS specifically targeted when encouraging delinquent citizens to avoid consulting counsel. The news release headline says it all: “IRS urges anyone having trouble paying their taxes to avoid anyone claiming they can settle tax debt for pennies on the dollar…” This plainly suggests that a claim of the ability to settle one’s debt for less than is owed is fraudulent.

But it’s the headline itself that’s misleading. The IRS’s own website plainly states that the OIC program “…allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability or doing so creates a financial hardship. * * *”

This language defies the news release’s allegation that tax pros offering OIC representation “make outlandish claims” that they are able to “settle a person’s tax debt for pennies on the dollar.” But that’s exactly what the program allows one to do, as explained by the IRS’s own website. If one owes $100,000, but can pay just $10,000, he may can settle through an OIC for ten cents on the dollar—i.,e., “pennies on the dollar.”

Even worse than suggesting that OIC settlement claims are per se bogus is the claim regarding the IRS’s ability to help. Commissioner Rettig is quoted as saying, “No one can get a better deal for taxpayers, than they can usually get for themselves by working directly with the IRS to solve their tax issues.” Does anybody really believe that the IRS is going to “get you a deal” if you just ask for it? In other words, Rettig suggests that people should avoid getting independent professional help. Instead, they should take to heart the old adage that promises, “I’m from the government and I’m here to help.”

Imagine the outrage of the A.C.L.U. if any state or local law enforcement agency issued an announcement saying nobody ever need consult counsel when dealing with such agency, because no lawyer can get them a better deal than “they can get for themselves.”

Rettig goes on to say that, “Taxpayers can check online for their best deal…” And though it’s true that the OIC is discussed on the IRS’s website, it’s equally true that the site provides no specific instructions on how to prepare, submit, argue, negotiate, or appeal an OIC. Moreover, it is impossible to submit an OIC online because one must be filed in writing only with the IRS’s Centralized Offer in Compromise (COIC) Unit, which is a specialized group of examiners who work only Offer cases. Thus, the idea that one can win an OIC online is completely inaccurate and misleading.

The commissioner follows with a statement lacking any credibility whatsoever. He says that (in additional to checking on line), taxpayers can call a “…specialized collection line where they can get fast service by using voice and chat bots or opting to speak with a live phone assister.”

We all know there’s no such thing as “fast service” when it comes to calling the IRS. Wait times for collection representatives are just about as bad as they can be. But even you were able to get a call answered quickly, there’s no such thing as a “specialized collection line” for OICs. As stated, they must be submitted in writing and are handled exclusively by COIC Unit examiners. It is simply impossible to get an OIC accepted over the phone of through the website.

How about the claim that taxpayers can get their best deal “by using voice and chat bots”? Is the commissioner suggesting that citizens can use the agency’s artificial intelligence tools to win acceptance of an OIC? This too is simply impossible, not just for the reasons already stated, but because every person’s financial facts and circumstances are unique. OICs take into account the totality of one’s personal and business financial circumstances as reflected in a lengthy financial statement that must be submitted with the OIC application. Most citizens are unable to navigate the byzantine financial statement without experienced counsel.

People in tax trouble generally find out the hard way that the IRS does not work like other law enforcement agencies. When dealing with the IRS, the burden of proof is on you. When it comes to an OIC, you must prove you qualify for the program and that the amount offered is the most you can reasonably expect to pay under the circumstances. The IRS doesn’t have to prove you don’t qualify.

And there’s the rub. The OIC program is controlled by Internal Revenue Code section 7122 and regulations thereunder, along with the massive Internal Revenue Manual, which has a lengthy chapter dedicated to the processing, evaluation, investigation, and acceptance or rejection of an OIC—plus the appeal rights associated therewith. This means that people often need professional help to get through the IRS’s labyrinth of rules, regulations, procedures, forms, and instructions.

To suggest that one can get an OIC using “voice and chat bots” controlled by artificial intelligence is, at best, a farce.

One might ask what might be driving the IRS’s effort to chill the right to counsel. After all, the right to counsel is one your ten essential taxpayer rights, as expressed in code section 7803(a)(3). My answer is to point to the tax gap. The IRS and the Treasury Department are apoplectic over the reported tax gap of $400-plus billion. They’re promising more agents, increased audits, and more aggressive enforcement to get the money.

On the other hand, an accepted OIC means the citizen actually pays less in taxes than he otherwise might. In 2020 and 2021 respectively, the IRS accepted just about 15,000 OICs. In every single case, the settlement meant the taxpayer paid less than was owed. The IRS does not tell us how much was written off, but it must have been billions of dollars. And they want the money.

By chilling the right of representation, and in turn inducing people to simply call the IRS to “make their best deal,” the IRS will force more people into long term installment agreements which they often cannot afford. Such agreements often make matters worse because people end up using current tax revenue to pay their back tax debt, which only leads to more delinquent years.

Make no mistake about it. The IRS is working to chill your right to counsel by branding all tax pros as frauds and scammers. They’re doing it because they intend to make every effort to squeeze blood from a turnip.

Delete Facebook, Delete Twitter, Follow Restoring Liberty and Joe Miller at gab HERE.

There is little doubt that the Internal Revenue Service is groaning under the burden of administering the tax code, which now exceeds more than 4 million words (up from 1.4 million, in 2000). The question is whether the agency will collapse under the growing weight of its concomitant processing and administrative problems.

Let’s consider a few sobering examples of what the IRS is up against, as identified by the National Taxpayer Advocate, Erin Collins, in her 2021 Annual Report to Congress.

1. Phone calls to the agency. In 2020 and 2021, Congress passed several significant tax law changes ostensibly to help Americans cope with the Covid-19 pandemic. It seems those changes thoroughly confused taxpayers.

In both 2019 and 2020, the IRS received about 100 million phone calls from taxpayers seeking help for various reasons. That volume of calls was standard over the past decade. But 2021 was quite a different story. That year, incoming call volume exploded to nearly 282 million — nearly tripling the load. There are no signs that things are getting better either, as more people than ever are thoroughly confused and are reaching out to the agency for help because of ongoing law changes.

2. Level of Service (LOS) for incoming calls. Phoning the IRS looking for help and actually getting help are two different things. It should come as no surprise that as call volume increased, the IRS’s capacity to answer the phone dropped. In other words, while 282 million people called the IRS, 282 million people did not get the help they were looking for.

The IRS refers to its ability answer the phone and render assistance as the “level of service” it provides. During 2019 and 2020, the IRS answered just 28.7 percent and 24.1 percent of citizens’ incoming calls, respectively. In 2021, that number plummeted to just 11.4 percent. Just over one in every nine people calling the IRS was able to talk with a person. In March 2021, the LOS dropped to below 4 percent — the worst it’s ever been.

The NTA reports that those who did get their calls answered did so after waiting on hold for an average of 23 minutes. But I can tell you, as anybody who’s phoned the IRS during the last 18 months can, a 23-minute wait time is extremely short. Most people wait for much longer, sometimes hours. The published hold time is misleading because most calls are simply cut off — or the caller just gives up — long before the call is answered.

Now, keep in mind that people calling the IRS are taking the initiative to file their tax returns correctly and on time. They are seeking clarity regarding IRS notices and letters so they can comply. A great number of calls are from people trying to make arrangements to pay their taxes. What kind of message does it send to the public when those trying to comply cannot get the help they need to do so?

One of the arguments used to support the push for $80 billion in additional funding under President Biden’s failed Build Back Better plan was the alleged need to equip the IRS to better assist citizens via telephone. But I have a hard time believing that any amount of money would be sufficient to build the infrastructure and staff necessary to handle 282 million calls annually.

3. Processing tax returns and correspondence. The core function of the IRS is to collect taxes, and the key to collecting taxes is to process tax returns. In 2021, the IRS received just over 160 million individual income tax returns. Businesses filed another 104 million returns.

By the end of the 2021 filing season, the IRS had a backlog of over 35 million unprocessed returns. As late as December 2021, the IRS still had:

*2 million unprocessed personal tax returns,

*8 million unprocessed business tax returns,

*9 million unprocessed amended personal and business returns, and

*Approximately 4.75 million unprocessed pieces of general taxpayer correspondence.

There was even an inventory of unprocessed returns from the 2020 filing season. And here we are in the midst of a new filing season in which another 260-plus million returns will be filed.

The logjam of unprocessed returns has meant that citizens have experienced long delays in getting refunds and in meeting the filing demands of the IRS’s various compliance functions. That’s to say nothing of the need to prove one has filed his return for non-tax purposes, such as buying a home, getting refinanced, or obtaining student or business loans. The logjam has also subjected citizens to serious hardship in their private lives. Millions of Americans rely on tax refunds to pay their bills. Delayed refunds mean that many likely couldn’t pay necessary living expenses.

Long processing delays in turn led to yet another overloaded system: the IRS’s website. The number of visits to the IRS’s website went from 651 million in 2019, to over 2 billion in 2021. The visits to its “Where’s My Refund” page nearly doubled, from 369 million 2019 to over 632 million in 2021.

The problem with Where’s My Refund, as explained by the NTA, “is that it was non-functional” for tens of millions of people because “it does not explain any status delays, the reason for the delay, where the return is in the process, or what needed to be done.” This lack of clarity meant that millions “went many months without any status updates, and some are still waiting for their refunds.”

What do you suppose is in store for taxpayers this filing season? The same, or worse.

It is now clear that our current tax system is collapsing, and $80 billion in more revenue will not fix the problem. The system is now far too vast in both scope and complexity, and is only getting worse as Congress stirs the pot with ongoing law changes. Tax reform must focus principally on simplicity, efficiency, and neutrality. This will greatly lighten the compliance load for the vast majority of citizens who are overburdened with tax-law compliance. Failure to do so only drives up the already staggering compliance costs and provides incentive for some people to simply not comply with the law.

______________________________________________________

For over four decades, Dan Pilla has been the nation’s leader in taxpayers’ rights defense and IRS abuse prevention and cure. Regarded as one of the country’s premiere experts in IRS procedures and general financial problems resolution techniques, he has helped hundreds of thousands of citizens solve personal and business tax and financial problems they thought might never be solved. As the author of 14 books, dozens of research reports and hundreds of articles, Dan’s work is regularly featured on radio and television as well as in major newspapers, leading magazines and trade publications nation-wide. Dan is a frequent guest on numerous talk radio programs where he is heard by millions of people each year. His fast-paced interviews provide hard-hitting answers to even the toughest questions. His many media appearances include CBN, CBS, Fox News, C-SPAN, the CBS Radio Network, the USA Radio Network and many others. His books have been recommended by prominent magazines and financial publications such as the New York Times, Wall Street Journal, Money, Family Circle, Investor’s Business Daily and more. Dan has written or contributed to major articles for Reader’s Digest, National Review, Reason, USA Today Magazine and others. The Associated Press once commented that “Dan Pilla probably knows more about the IRS than the commissioner.” The Wall Street Journal ranked his book, The IRS Problem Solver, as the number one tax book in America.

Dan was a consultant to the National Commission on Restructuring the IRS. He works with numerous public policy research institutes and presented testimony to Congress on several occasions. His testimony to the Senate Finance Committee blew the lid off IRS abuse and led to many new taxpayers’ rights and protections. He was a member of the Editorial Board of the Road Map to Tax Reform Project, which drove the Bush Administration’s tax reform agenda. Dan is admitted to practice before the United States Tax Court and is enrolled to practice before the IRS. Dan is also the Executive Director of the Tax Freedom Institute, Inc., a national association of tax professionals.

Delete Facebook, Delete Twitter, Follow Restoring Liberty and Joe Miller at gab HERE.

A conservative group has filed complaints with the IRS accusing leading liberal activist David Brock of illegally profiting from the vast network of groups he has built within the Democratic Party’s infrastructure.

The complaints, which were filed by the Patriots Foundation, a right-leaning nonprofit, and reviewed by The Daily Beast, detail a series of transactions that, the group says, show the injection of money from a tax-exempt group Brock founded into a private, for-profit news business that he owns.

“These complaints we filed provide damning indictment of serious allegations about how his organizations have circumvented rules and exploited the tax-exempt status of the organizations for personal benefit and partisan political purposes, and potentially siphoning millions for improper purposes,” Patriots Foundation co-founder Craig Robinson told The Daily Beast in a statement.

The nonprofit at issue is the American Bridge 21st Century Foundation, and it’s part of a constellation of entities that Brock has seeded over the years and which he tasked in early 2017 to, in his words, “kick Donald Trump’s ass.” The foundation is the “dark money” affiliate of AB PAC, a super PAC that is pouring millions of dollars into an effort to defeat Trump in November. (Read more from “Top Dem Operative Accused of Illegally Profiting From His Political Empire by Conservative Group” HERE)

Follow Joe Miller on Twitter HERE and Facebook HERE