The National Taxpayer Advocate Service 2015 Annual Report to Congress was released on January 6, 2016 and identifies several problems relating to international taxpayers along with recommend changes to IRS procedures and laws to better serve the taxpayer. Although these recommendations will not resolve all the frustration expats experience, at least it is a step in the right direction.
What is the National Taxpayer Advocate Service?
The National Taxpayer Advocate Service (TAS) is an independent organization working within the IRS to help taxpayers resolve issues, and recommend changes to IRS procedures and laws. The TAS was originally established in 1979 to serve as an advocate for taxpayers. The Taxpayer Bill of Rights describes the functions of the TAS:
- To assist taxpayers in resolving problems with the IRS
- To identify areas in which taxpayers have problems in dealings with the IRS
- To the extent possible, propose changes in administrative practices of the IRS to mitigate those identified problems
- To identify potential legislative changes that may help mitigate such problems
The TAS also submits reports directly to Congress regarding the most serious problems facing taxpayers during the year. The TAS also has a broad authority with the IRS, being able to set deadlines by which the IRS must respond to taxpayer issues. Additionally, the TAS staff handles individual taxpayer issues that arise during the year.
How Does the 2015 Annual Report to Congress Address US Expats?
The frustration that expats experience while dealing with the IRS has not gone unnoticed by the TAS. In the 2015 Annual Report, International Taxpayer Services was among the list of “Most Serious Problems.” You can read the volume relating to international taxpayers here.
“International taxpayers are a growing population who face declining taxpayer service resources and increased filing and reporting requirements, along with substantial penalties for noncompliance.” – TAS 2015 Annual Report to Congress
The IRS has not compensated for the closure of international tax attaché offices or addressed the unique needs of international taxpayers. The TAS has also berated the IRS for viewing anything offshore as illegal.
The IRS has announced that they have plans to expand international criminal investigations, yet the last four international IRS attaché posts were closed. This has created many issues for international taxpayers – hours-long waits on IRS tolled phone lines, lengthy and cumbersome website information, and under-informed IRS operators regarding international taxpayer filings.
Other forms of free taxpayer assistance were also discontinued by the IRS, including the Electronic Tax Law Assistance Program and R-mail. The report states:
“The IRS has removed the dialogue and shut itself off from international taxpayers with no way of knowing whether it is providing the service taxpayers need.” – TAS 2015 Annual Report to Congress
The report also states that the IRS needs a permanent service-wide team focused on the unique service needs of international taxpayers. In 2012, the IRS created the International Individual Taxpayer Assistance (IITA) team. Although the team was initially successful, it’s efforts have diminished in recent years. The TAS believes that without formalizing and making permanent the IITA team, taxpayer service for international taxpayers will dissipate further.
Are There Any Plans to Change FBAR Requirements?
The TAS also wants legislation to cut back on Foreign Bank Account Reporting (FBAR) penalties, citing that even the amnesty penalties are equal to 8+ times the amount of unreported tax, and 10 times the amount of the penalty for civil tax fraud.
The TAS also recommends raising the filing threshold for filing an FBAR form from $10,000 to $50,000, as well as removing any penalties if the taxpayer resides in the same country that the account is located in.
The redundancy of filing the FBAR form and Form 8938 (filed with your tax return), is recommended to be eliminated as well.
2015 TAS Recommendations to Congress
In summary, these are some of the recommendations made to Congress by the National Taxpayer Advocate Service relating to international taxpayers:
- Raising the FBAR form threshold from $10,000 to $50,000
- Reopen the four international tax attaché offices
- Conduct impact studies
- Reestablish the ETLA (or a similar program)
- Allocate funding for staffing additional telephone service
- Reinstate the International Individual Taxpayer Assistance (IITA) Team
Can the TAS Help Resolve Specific Issues?
The TAS is also conduit for international taxpayers to get their individual tax issues resolved, especially those that have been bogged down in the system. The complexity of international tax issues often requires “extra processing” of tax returns at the IRS, often delaying the final filing of the return by weeks or months.
Returns that need to be amended (corrected after they have been filed), have been known to be delayed for more than a year, necessitating the involvement of the TAS to obtain refunds and closure to tax forms.
How Do You Contact the TAS?
Getting in contact with the TAS is not as difficult as it may seem, with far less hassle than contacting the regular IRS lines. First follow this link to the Taxpayer Advocate website, and pick the state you have the most ties to, then the local TAS office. You can also use the TAS website to look up solutions to your problems, there are many helpful resources addressing common tax problems.
The National Taxpayer Advocate Service helps to shape laws within the IRS, evening the playing field for the individual taxpayer, and giving a voice to the average man and woman. International taxpayers now have an advocate in the higher levels of the IRS and Congress, hopefully changing things for the better!
Need Help with Your Expat Tax Situation?
Our expert expat accountants are here to help you navigate your unique tax situation. Contact us with details on your specific situation and we will be happy to assist you.