To date, fiscal year (FY) 2014 has been an active year for the IRS. In addition to accepting the National Taxpayer Advocate’s proposal to adopt a Taxpayer Bill of Rights (TBOR), the IRS ran a generally successful filing season (although taxpayer services were sub-optimal largely due to staffing limitations), instituted a more equitable approach to its Offshore Voluntary Disclosure initiative, and introduced a voluntary system for educating unenrolled return preparers. The IRS has also taken significant steps to implement the Affordable Care Act (ACA) and to prepare for the 2015 filing season. But as we note in this report, the good news also raises additional questions and concerns.
This next fiscal year, beginning October 1, 2014, promises to be one of great challenges. The IRS has yet to emerge from the controversy surrounding its scrutiny of political activity by organizations applying for tax exemption. In this report, we follow up on our 2013 Special Report, Political Activity and the Rights of Applicants for Tax-Exempt Status, published with last June’s FY 2014 Objectives Report to Congress.
Another key issue is the need for minimum standards for tax return preparers. It is clear the IRS and taxpayers need the action and cooperation of Congress to address the problem of incompetent and unscrupulous return preparers preying on the most vulnerable part of our population.
In addition, the IRS is actively harming victims of return preparer fraud by delaying the release of their refunds for years. Nowhere has the IRS failed to abide by the TBOR more than with respect to this issue.