Today, the New York Times reports, the National Taxpayer Advocate delivered her annual report to Congress. First established in 1998, the Taxpayer Advocate Service describes itself as “an independent organization within the IRS that assists taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should.” Judging by the generous use of exclamation points on its home page, moreover, the Service would appear to be quite excited about this mission.
Among other things, I was struck by certain aspects of the IRS’ present-day operations that the annual report critiques. I hadn’t realized, for example, that the IRS makes widespread – if ineffectual – use of private debt collectors, or that it charges (sometimes substantial) fees to respond to taxpayer inquiries.
Two reform proposals in the annual report, however, particularly caught my eye:
First, there is the Advocate’s proposal to adopt a new taxpayer bill of rights – an odd-seeming concept, to begin with. (Isn’t the Administrative Procedure Act the “bill of rights” of the modern administrative state?) This bill of rights, moreover, would include a list of taxpayer “responsibilites,” including requirements that they (in the Times‘ words) “conduct themselves honestly and  cooperate with auditors and tax collectors.” But what exactly is the “honest conduct” the Advocate has in mind? Avoiding fraudulent statements to the IRS? Surely, we’ve already got that covered. What’s other honest conduct might be expected? Some general promise of good and clean living?
Even more eye-catching were the report’s proposed “Apology Payments,” to be doled out by the Advocate’s office – in amounts ranging from $100 to $1,000, and up to a collective cap of $1 million – to taxpayers who suffer “excessive expense or undue burden” because of IRS error or delay. Leaving aside the procedural complexities of such a scheme, are there analogous arrangements to be found in other areas of law? (The Times reports that the U.K. and Australia already have such a scheme in their tax code.) Do we do it anywhere else?