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Underfunding undercuts IRS effectiveness, taxpayer advocate says

Independent advocates are supposed to call them as they see them. They are not beholden to a certain agency or institution; they seek, rather, to make that institution and its stakeholders function more effectively, in ways that reflect the institution's founding values.

And so Nina Olsen, the national taxpayer advocate, is not there merely to criticize the IRS. Nor does the advocate exist solely to help taxpayers in Southern California and across the nation avoid heavy-handed IRS tactics.

The advocate's role may include those things. But like a similar watchdog, the Treasury Inspector General for Tax Administration, the taxpayer advocate's overriding interest is in seeking to foster a tax system in which the rights and needs of taxpayers and the government are in balance.

An increasing problem, however, is that government is not doing its part.

To be sure, the IRS's budget problems are not its own making. Like other federal agencies, the IRS has faced its share of painful across-the-board spending cuts. But the agency has made many missteps of its own recently. The most high-profile of those missteps, of course, was the disturbingly poor handling of applications for tax exempt status by certain political groups. 

In a mid-year report to Congress, however, the taxpayer advocate turns her ire not on the IRS, but on a penny-wise, pound-foolish Congress that keeps cutting the IRS budget.

The advocate makes the case that the agency's decreasing budget does not make sense given its increasing responsibilities. After all, must not only administer a tax code of Byzantine complexity. It has now also been newly tasked with a key role in implementing the Affordable Care Act.

Tax issues requiring interpretation and occasionally tax litigation to resolve will inevitably occur, even with a well-funded agency administering the tax code. But a perpetually underfunded agency is finding it hard to do its proper part in these resolutions.

Source: CNN Money, "Taxpayer advocate: IRS needs more money. Seriously.," Jeanne Sahadi, June 27, 2013