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National Taxpayer Advocate Nina Olson helps solve taxpayer problems with IRS.

Editor's Note: This article is the second in our series of interviews with key executives at the IRS.

The IRS Restructuring Act of 1998 created the Office of Taxpayer Advocate as a separate function within the IRS. The Taxpayer Advocate Service (TAS) is responsible for assisting taxpayers to resolve their problems with the IRS, identifying taxpayer problem areas, and recommending IRS administrative changes or legislative solutions to correct those problems. There is at least one Taxpayer Advocate office in each state. The National Taxpayer Advocate is appointed by the Secretary of Treasury, following consultations with the IRS Commissioner and IRS Oversight Board.

Nina Olson, the current National Taxpayer Advocate, assumed her duties in March 2001. Prior to joining the TAS, she was a practicing tax lawyer and founded and served as the executive director of the Community Tax Law Project, the first independent 501(c)(3) low-income taxpayer clinic in the United States.

Ms Olson earned a Bachelor of Arts degree from Bryn Mawr College, a Juris Doctor degree from North Carolina Central University School of Law, and a Masters of Laws-- Taxation from Georgetown University Law Center. She has been an adjunct professor at the Virginia Commonwealth University, College of William and Mary School of Law, and the Richmond School of Law.

We now present an edited version of our question and answer session with Nina Olson.

NSA: Considering that Congress changed the name of your position from Taxpayer Ombudsman to National Taxpayer Advocate, could you shed some light on how you view your functional area?

Olson: We are doing some research right now on the history of advocates and ombudsmen in the federal government. The taxpayer advocate position began as an administrative appointment and it was called the ombudsman. It evolved and was codified in various stages leading up to 1996 when it became the Taxpayer Advocate. It became a separate organization in 1998.

The ombudsman concept apparently started in 1274 in Sweden and was originally viewed as an agent or representative. The role evolved as a neutral, somebody who could facilitate and be a "go-between" for the public and the government. The "go between" process is triggered by somebody outside the agency asking for help. The question becomes what is your relation to that outside person and what can you do for them? I have been trying to visualize the continuum of relationships where possibly, in the traditional ombuds manner, you are a neutral and have a whole series of duties.

The ABA has identified three critical characteristics for ombuds offices: independence, impartiality, and confidentiality. Within those parameters you would criticize the organization for which you were an ombuds. You would help facilitate resolution of problems. You would make suggestions but stop short of actually making or directing the organization to do specific things. That, I think, is very clearly the foundation of the Taxpayer Advocate Service when it started out as an ombudsman.

Over the years, Congress added things to make it a little different. For example, Congress gave us the direct authority to stop the IRS from doing something. We can order the IRS to take an action. We do have some direct authority, and this differs from the classic ombuds model. But when you look at the evolution of the statute, nowhere in the statute, and I think this is true through 1998, did they consider the Taxpayer Advocate in any of its incarnations as being the person who would make the decision in a substantive case.

Prior to 1998, all the people working cases under the auspices of the Taxpayer Advocate, namely in the problem resolution program or the people working as problem resolution officers or employees working problem resolution cases, were all functional employees. They made substantive decisions within their own authority as a revenue agent or revenue officer. But they were never part of the Taxpayer Advocate.

The 1998 Act that swept all those employees into the Taxpayer Advocate Service, and reporting to the Taxpayer Advocate accomplished one of the three critical goals--independence. You gained an independent reporting structure. In the process, however, you lost all those powers those individual employees had by virtue of being a revenue agent or revenue officer.

NSA: The practitioners really miss those problem resolution officers.

Olson: I am sure they do.

NSA: Some practitioners view the Taxpayer Advocate's office as the replacement for the problem resolution officers and expect the same type of problem resolution function.

Olson: It is not. It really does go back to the question about the difference between an ombudsman and an advocate. Let me tell you where I am in my thinking, which continues to evolve.

The only other advocate that we can find in the federal government that is statutorily authorized is in the Small Business Administration. That position is mandated by statute to be a true, pure advocate and not an ombudsman, but one that is taking issues on behalf of small business throughout the entire federal government. His job is to make sure that the small business point of view and concerns are addressed in whatever regulations are being developed, be it in tax law, environmental laws, health and safety or whatever. He has a very far-reaching mission. It is not to resolve problems or solve specific cases. It is literally to advocate issues.

My position in the Internal Revenue Code is described very clearly. It gives us four missions. The first one is to help taxpayers solve their problems with the IRS. Now the language is very clear; it is not problem resolution. We don't take the cases and make the solution ourselves. We act as that neutral party between that taxpayer and the IRS. We help them solve their problem with the IRS.

NSA: We think there is a big disconnect out in the field.

Olson: It's huge. It has taken a great deal of time to get people, even inside the IRS, to understand our role. You help taxpayers solve problems; by doing so you can identify problems of a systemic nature beyond just that individual case you are helping to resolve. And once you have identified problems of a systemic nature, you make administrative proposals to mitigate those problems. Or you make legislative proposals to mitigate problems that can't be solved administratively. So, you can see there is a little of the ombudsman and there is the advocacy side, like the SBA advocate, where you are taking these systemic issues and saying let's fix them. So TAS is this odd hybrid.

To understand the Taxpayer Advocate Service, you need to remember that we did start out as a pure ombuds, as a facilitator, as a neutral and a go-between contacted by the taxpayer needing help. We are there for the taxpayers; that is who we serve.

But how do we serve them? Do we make those decisions? In most cases, no. We are, however, trying to determine if there are certain things that we can do that are procedural in nature that we don't have authority under the statute to do, but that we can ask the Commissioner to give us the authority to do. We have cases that are so easy to fix, because they don't require decision making like you have in exam cases. Why not let us fix them rather than having to send them over to the operating division for resolution?

Before I came on board, Val Oveson had negotiated with the operating division commissioners to get an agreement in which we would get certain authority. Some cases are mundane, like customer account authority, such as being able to go in and move credits around between periods to correct payment miss postings. We don't want to wait 30 days for someone in the operating division to get around to doing it. We have seen the taxpayer's documentation; it is not a judgment decision in any way and we can go in and fix it.

But some more difficult calls were made. We have been given the authority to establish certain installment agreements or to make determinations on penalty abatements for reasonable cause or to allow certain claims.

Just the other day, an employee sent me a draft of the letters we are sending out on Taxpayer Advocate Service letterhead to taxpayers who are coming in to us with cases. Let's say a taxpayer asks us for help on a penalty abatement case. We look at the case and see that it hasn't been opened up in the operating division, so we can make the determination. What if we make a determination that you are not entitled to it? We have letters coming out of the TAS that say "We are sorry, we have looked at this and we determined that you have not demonstrated reasonable cause and therefore we are denying your claim and you have appeal rights to the Office of Appeals." I am thinking, do we really want this type of letter to come out of the Taxpayer Advocate Service? NO!

When you look at these letters, you can't tell the difference between our letter and the letter from the functional area. And it's true, because we are doing the work of a functional area. I'm saying to my people that we really need to rethink this. What do we do if Appeals reverses us? What does that say about us? This is very confusing and I am not comfortable with that.

The first practitioner who gets one of those letters is going to call Bernie and ask, what is going on with the TAS? I have received letters where I was told that they couldn't tell the difference between a TAS employee and an exam employee. It goes back to the discussion, are we an advocate and what does that mean? I think it clouds our relationship with the taxpayer in the long run if we are able to make those kinds of decisions. If we never deny a penalty abatement, it undermines our authority because it makes the rest of the IRS say about the TAS--"they never met a taxpayer they didn't like?' We lose credibility, and this puts us in a difficult position.

Practitioners complain about the time it takes to work a case within TAS. A taxpayer must meet one out of seven criteria for TAS to accept a case. Pour of the criteria are what we call hardship cases. When a case comes in that meets the economic hardship test, we do a fair amount of case building. We will help them pull information together, make recommendations to the operating division based on taxpayer information, and we might even get a legal opinion from counsel.

Then we send it over to operations with what we call an Operations Assistance Request (OAR). It tells the operating division that we want them to make a decision on this case and to consider what we have sent you and make a decision within a certain period of time. That is an informal device, and this is our preferred approach before we hit somebody with a Taxpayer Assistance Order. Nine times out often it works and we have a very high change rate from the current IRS position in our cases--in the 60 percent range. In about 20 percent of cases, the law prevents a change--the statute has run or the taxpayer is asking for something the law does not permit us to do. In the other cases, the IRS has already taken action or said "no" for whatever reason. in the vast majority of cases, we have had the desired result.

Practitioners complain about the length of time it takes to get a case worked. You not only are building a case in the TAS but also sending it over to the operating division. The operating division and appeals are under pressure to work their own cases, so how do we get attention to TAS cases? This has been a longstanding complaint by my employees, who find this very frustrating. They want more authority, and it becomes an endless cycle.

NSA: Don't you think that Congress intended to give the TAS the authority?

Olson: I don't interpret the statute that way. Counsel doesn't interpret the statute that way. I do not believe the statute says we should be making determinations in exam cases or in Offers-in-Compromise. We have the authority to recommend and we do that. What we are working on is how to get these cases moving. It becomes a managerial issue. We can do all the recommending in the world, but it doesn't get an employee on the other side to pay attention to us.

We have been negotiating "service level agreements" for the past nine months with the operating divisions and appeals on economic hardship cases. Under these agreements, when TAS sends over an OAR, the operating division will respond within one day with the name of the employee who will handle the case, and within three days about whether they believe they can give relief or not. It may take longer in actual practice, but in at least three days we should know the likely outcome.

NSA: We get calls periodically that a levy is about to happen or wages garnisheed and the practitioner calls the IRS but, for whatever reason, cannot make contact with the IRS agent or supervisor. What do you do?

Olson: You call the Taxpayer Advocate. If the levy hasn't occurred, the statute gives us the authority to release the levy. Congress gave us this authority precisely because of the tie-in with the concept of economic hardship. We do not have authority if the property has already been taken and the taxpayer is asking for the property to be returned.

By the way; we are doing training for TAS employees on liens, withdrawals of liens, release of levies, and return of levy proceeds because this is so critical for us. It is a very detailed program, so all our employees need to understand the law so they know what they can do themselves or what to ask the operating division to do.

The problem is, without the service level agreements, we had the same problems as practitioners--sometimes we couldn't find anyone to work the case or find a supervisor.

Under the service level agreements, there is a person somewhere in the IRS who might receive an OAR whose job it is to receive that OAR and find someone to work that case in one day and give us some kind of answer within three days. This covers economic hardship cases.

The other three criteria are what we call systemic hardship. This is where the system has screwed up, as in a delay of 30 days over the normal processing time. These are not quite as urgent as an economic hardship case. In a systemic case, the service level agreement says that the operating division will, within three days of receipt of an OAR, provide TAS with the name of the person who is working the case. TAS will then contact that person and find out how soon they will give an answer. We are seeing that the operating divisions are already picking up on this commitment to work our cases faster.

That is going hand-in-hand with another initiative I introduced. We have had a lot of cases in our inventory for more than 100 days. I asked my team to look at those 100-day old cases to see if any of them warrant the issuance of a Taxpayer Assistance Order. Some cases, like innocent spouse, take a lot of time and we will leave those open past the 100 day mark.

The point is that we have the taxpayer assistance order tool and at some point we will us it. The operating divisions know that at the 100-day mark, they may get a Taxpayer Assistance Order so they will start moving those cases. I think in the next few months, with the service level agreements, which take effect September 1, and the 100-day reviews, you should see cases moving much faster through TAS.

The service level agreements are an incredible step forward. I think practitioners can look forward to something smoother and having the Taxpayer Advocate advocating for them inside the IRS.

NSA: How many TAOs have you done?

Olson: Last year we did 18 and I expect more this year. I have not personally issued any but have threatened, and the threat has proven effective.

NSA: How should practitioners use your office?

Olson: First, you need to know the criteria for significant hardship. We have been working on an outreach plan. We have interviewed about 2,000 taxpayers and practitioners and learned that not many people knew much about us. People were concerned about our independence and confidentiality. The core issues identified by the ABA were reflected in the focus groups. We are developing a campaign to tell people when and how to use the TAS and what to expect. We will then target it to the practitioners as well as to raising the consciousness level with targeted groups of people that need help.

To use TAS, practitioners need to make sure their clients have significant hardship and have exhausted all administrative remedies. For example, if they are in exam and they are not getting the examiner to agree on all the issues, don't go to TAS first, go to Appeals. Now, if you are in exam and they are ignoring everything that you send in or they are just not answering you and you can't get anybody's attention to get a decision, that's when you should call TAS. We can intervene when normal IRS processes aren't working well.

Because of frustration with the Practitioners Priority Service, practitioners come to us when they can't get transcripts. Sometimes we can get them very quickly, but I would caution people about going this route. About seven percent of our time is spent on calls that are not case related--business hours of walk-in sites, that sort of thing. You have to ask do you really want to use a limited IRS resource that way. I would ask practitioners to ask that question of themselves before they pick up the phone.

NSA: NSA is on record as opposing the new IRS National Research Program. When you testified before the House Ways and Means Oversight Subcommittee, you said that there might be the need for third party oversight of these audits. What are your thoughts about this?

Olson: When they were first developing the NRP, the person in charge of the project met with me for about two hours and I provided a lot of comments. When I was in private practice I had represented taxpayers, both business and individuals, in TCMP audits. I was able to explain how excruciating these audits were. We went through specific issues that I believe were reflected in some of the design of the TCMP.

We have a representative, my deputy Henry Lamar, on the senior team that is monitoring the program. Because the intensive line-by-line audits will be done by a core group, you are going to be able to monitor them very closely. If there are things going on that taxpayers are concerned about, there will be a quick avenue to remedy and certainly they will have access to the TAS. Taxpayers will receive Publication 1 and be told that they can call the TAS. I would hope, for those people represented by practitioners, that the practitioner would call us on a case-by-case basis or if they see a systemic problem developing. But. I honestly think that they will not be like the TCMP audits.

One of the things I am concerned about, and working on, is that we will be doing audits of low-income taxpayers. I am concerned that they will riot have representation. The information they will be audited on that will go into our system to determine audit selection may be skewed because their cases may not be well developed.

NSA: Like EITC.

Olson: Right, and dependency exemptions or head of household. We need to figure out a way to make referrals to the low-income taxpayer clinics.

NSA: Can you tell us what you are most proud of concerning your work as the Taxpayer Advocate?

Olson: In my 15 months, I am intensely proud of the work my employees perform. They work under incredibly difficult conditions and in an environment that has been changing. To their credit, every day they do the best they can for taxpayers. My employees selected themselves for this position. They wanted to be in the TAS. They have the dedication. They work under incredible pressure. I am incredibly proud of that. I am proud of the issuance of our December 31, 2001 report. They exceeded my expectations in the substance of the report, its clarity, the stimulation of discussion, which is that we were looking for.

The service level agreements are a real accomplishment in terms of changing the way the TAS cases are worked. I am a realist--it might take a year to get everything institutionalized and get people comfortable with them. But at least we got an agreement and acknowledgment that says that TAS cases are a priority for the IRS and there is a structure that makes it happen. This is what was missing before.

NSA: What frustrations have you experienced?

Olson: This is just a huge organization. I thought after working in the tax area for 25-26 years on the outside that I was sensitized to how big it is, how hard it was to get things done. I thought I was capable of dealing with the frustration because, as any practitioner knows, practice is frustrating. I had it in the back of my mind that "I am the Taxpayer Advocate; I won't have as much as this" Well, silly me, it is just on a different level.

We just can't discount the effect of the bureaucracy on well-meaning people who want to reach the right decision. You can see how it wears down employees and embitters them.

But on the other hand, you have almost 100,000 employees to operate this tax system. You need all those rules and procedures or who knows what would happen. As the Commissioner says, the bane and pride of the IRS is that our people, much to their good credit, do follow instructions and procedures. You don't want someone just deciding to change, say, return submission processing, and suddenly you are missing several thousand returns. When you switch to things that require the exercise of discretion, such as Offers in Compromise, it becomes difficult because you have been brought up in a system of rules and procedures. That has been the basis for your evaluations and suddenly you are told to think about this. You don't know what is allowed. And you certainly are not getting a lot of clear guidance from your boss about what is allowed. It is a very difficult position. That is something the IRS needs to deal with. I have been vocal about that, and certainly in my own organization we exercise more discretion than most.

NSA: How did your background with the low-income taxpayer clinics help you in this job?

Olson: I have real street knowledge about working cases, which is very unusual for most executives inside the IRS. Many career executives started out as revenue agents or revenue officers, but that was much earlier in their careers. I have been an advocate on the outside as a public-defender type advocate. Some people are surprised that I actually know what is happening with a case. I am very hands-on and detail oriented.

This is something I am trying to counsel practitioners about--you cannot under-estimate in the new IRS the importance of knowing procedure. For example, with the centralized Offer in Compromise program, I was talking to someone who wanted to know if an offer would fly or not. In order for you to know that, you have to know how the OICs are processed at the centralized site. Setting aside whether or not that is a good thing or bad thing, there are very discrete steps on offers as they come into one of the two campuses. If you don't understand the process, you could have what might be a perfectly valid offer but it won't make it through. With centralization of activities at campuses, that is going to be a growing issue with practitioners. They are going to have to understand process as well as law. When I am out talking to people, I am going to inform them about process. We can talk about the law but you need to understand the process too. Then we can fit your case in and see who is looking at it at each point in the process and see what kind of scrutiny it needs to pass.

RELATED ARTICLE:

THE SEVEN CRITERIA FOR THE TAXPAYER ADVOCATE TO ACCEPT A CASE

A complaint or inquiry about a federal tax matter meeting any of the following conditions will be included in the Taxpayer Advocate Service Program:

* Taxpayer is suffering or about to suffer a significant hardship.

* The taxpayer is facing an immediate threat of adverse action.

* The taxpayer will incur significant costs if relief is not granted (including fees for professional representation).

* The taxpayer will suffer irreparable injury or long-term adverse impact if relief is not granted.

* The taxpayer has experienced a delay of more than 30 calendar days to resolve a tax account problem.

* The taxpayer has not received a response or resolution to their problem or inquiry by the date promised.

* A system(s) or procedure(s) has either failed to operate as intended or failed to resolve the taxpayer's problem or dispute with the IRS.

A SHORT HISTORY OF THE TAXPAYER ADVOCATE SERVICE

1976 A pilot program is established in four cities to measure how well-established IRS procedures and processes identified and resolved taxpayer problems, complaints, and concerns.

1977 The pilot program prompts the creation of the Problem Resolution Program.

1979 Taxpayer Ombudsman position is created.

1988 The Commissioner created Taxpayer Assistance Actions to direct IRS to suspend enforcement actions or expedite procedures if certain criteria are met.

1989 The Taxpayer Assistance Order is created by the Taxpayer Bill of Rights.

1996 The Ombudsman is replaced by the Taxpayer Advocate and the scope of the TAOs is expanded.

1997 IRS Restructuring Act creates the Office of the Taxpayer Advocate as a separate entity within the IRS.

2000 The Taxpayer Advocate Service stood-up on March 12

LISTEN TO YOUR BODY TALK

Whenever you feel any discomfort or fatigue while sitting, it's your body's way of telling you something. Here are some exercises you can do right at your desk.

Take Deep Breaths

Breathing deeply is one of the keys to good health. In addition to affecting all sorts of body functions, deep breathing relieves stress.

* Concentrate on your breathing.

* Take five to ten long breaths, inhaling through your nose and exhaling through your mouth.

Stretch Your Hands and Wrists

* Stretch your arms out to your sides and over your head every 15 to 30 minutes. Then work on the lower extremities.

* Massage your hands and wrists to improve circulation.

* Massage the spaces between your fingers and the areas around your nails.

* Flex your fingers and do wrist stretches.

Relieve Neck Tension

Do this exercise while breathing deeply. Hold each step for three deep breaths.

* Tilt your head toward your left shoulder, then toward your right shoulder.

* With your head in a forward position, drop your chin to your chest and raise it back slightly.

* As a variation, keep your head upright. Look over your left shoulder several times, then over your right shoulder several times.

If you use the telephone a lot, you'll save your neck a great deal of stress if you use a speakerphone or headset.

Get a Power Stretch

Do this right in your chair. It really feels good!

* Stretch your arms up and over your head.

* Straighten your legs and lift your feet off the ground.

* Arch your back and feel your muscles stretch.

* Close your eyes and take three deep, relaxing breaths.

If you experience pain doing any of these exercises, please stop and check with your doctor.
What Body Signals Are You Sending?

Here's how to decipher the message
 behind the action.

Activity Message

Firm handshake You are confident
Weak handshake You are not confident
Sitting up straight You are paying attention
while listening
Crossing and uncrossing You are bored or preoccupied
your legs while listening
Eyes roaming around You are disinterested
the room


Michael Chakarun, CPA, is NSA's Director of Federal and Legislative Affairs. Bernie Phillips, ATA, is NSA's Tax Manager.
COPYRIGHT 2002 National Society of Public Accountants
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2002 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:Internal Revenue Service
Author:Chakarun, Michael; Phillips, Bernie
Publication:The National Public Accountant
Article Type:Interview
Geographic Code:1USA
Date:Sep 1, 2002
Words:4800
Previous Article:Conducting effective meetings. (Today's Accounting Manager).
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