America


The US Internal Revenue Service is failing expats, says new report

by Ray Clancy on January 14, 2016

The US tax man is failing to provide an adequate service for American taxpayers living abroad having closed overseas offices and reduced other services, according to a new report.

Indeed, the report from the National Taxpayer Advocate, goes on to say that the US Internal Revenue Service (IRS) “does not sufficiently address the unique needs of international taxpayers.”

Tax-LawsIt points out that despite an increase in recent years in the number of taxpayers who are being required to file tax returns from outside the country, the IRS has cut back on its overseas taxpayer service in an effort to cut costs.

The result is that taxpayers who used to be able to obtain help from overseas offices must “now must either call an overwhelmed, tolled IRS telephone number in the United States or obtain information from the irs.gov website.”

In particular it cites the termination of the Electronic Tax Law Assistance Programme (ETLA) last October which means there is no longer a free option or taxpayers overseas with specific questions on tax.

The IRS also discontinued R-mail, a system that allowed customer service representatives to refer taxpayer questions to employees with specific expertise. The NTA has repeatedly written in past annual reports about the unique needs of international taxpayers, and criticised the IRS for being slow to address them.

“By eliminating ETLA and R-mail, the IRS has shut itself off from [overseas] taxpayers, with no way of knowing, unless the taxpayer makes a mistake or the IRS selects his or her return for audit, whether it is providing the service taxpayers need,” the report says.

The report recommends that the IRS ought to improve its handling of expat Americans by reopening the four international tax attaché offices that it recently closed, and provide funding for local taxpayer advocate position in each of them.

It also suggests that the IRS should conduct impact studies to determine the effects on taxpayer service, compliance, and revenue that would be achieved by the opening of additional tax attaché offices around the world.

And it calls for the ETLA, or a similar programme, to be reinstated with time-frames for responses and funding in order to provide an additional telephone service, to accommodate the need created by the expansion of international tax law enforcement activities.

The report mentions that the International Individual Taxpayer Assistance team, which was set up in 2012 when the problems being faced by American expat taxpayers were beginning to make headlines, has become ‘largely inactive’.

“The IRS declined to adopt the National Taxpayer Advocate’s 2012 recommendations to make the team permanent with a formal charter and required periodic reporting, and not surprisingly, the team has been largely inactive recently. The team’s main actions during the last two fiscal years have been limited. Without formalising and making permanent the IITA team, taxpayer service for international taxpayers will dissipate further,” the report concludes.

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