Representation before the IRS · Related Issues

Taxpayer Advocate Service (e.g., criteria for requesting assistance)

The Taxpayer Advocate Service is easy to misuse. It is not an appeal, not a second opinion on the merits, and not a way to reopen a determination the client dislikes. It is an independent office within the IRS with a statutory function — helping taxpayers whose problems the ordinary machinery has failed to solve — backed by a real power to order the IRS to stop, start, or undo something. The nine criteria are half the topic; what a Taxpayer Assistance Order can actually do is the other half.

The rule

The office and its independence. There is established in the IRS an “Office of the Taxpayer Advocate,” under the National Taxpayer Advocate, who reports directly to the Commissioner (IRC § 7803(c)(1)). The appointment carries a revolving-door restriction — see the figures table — and the appointee must have “a background in customer service as well as tax law” and “experience in representing individual taxpayers.”

Its functions. To assist taxpayers in resolving problems with the IRS; identify areas in which taxpayers have problems dealing with it; propose changes in administrative practices to mitigate them; and identify potential legislative changes (IRC § 7803(c)(2)(A)).

Local offices, and what they must tell the taxpayer. At least one local taxpayer advocate serves each State. Each must, “at the initial meeting with any taxpayer seeking the assistance of a local office,” notify the taxpayer that the advocate offices “operate independently of any other Internal Revenue Service office and report directly to Congress through the National Taxpayer Advocate,” and each local office maintains separate phone, facsimile, other electronic access, and post office address (IRC § 7803(c)(4)).

The confidentiality discretion. A local taxpayer advocate “may, at the taxpayer advocate’s discretion, not disclose to the Internal Revenue Service contact with, or information provided by, such taxpayer” (IRC § 7803(c)(4)(A)(iv)). This is a discretion, not a privilege.

Reports to Congress. The Advocate reports on objectives by 30 June each year and on activities by 31 December, each with “full and substantive analysis, in addition to statistical information” (IRC § 7803(c)(2)(B)). The Commissioner must require a formal response to the Advocate’s recommendations within three months (IRC § 7803(c)(3)).

When TAS takes a case. See the figures table for the nine criteria the Service publishes, grouped into financial hardship, IRS system issue, and fair and equitable treatment. Assistance is requested on Form 911.

Taxpayer Assistance Orders. On application by a taxpayer, the National Taxpayer Advocate may issue a Taxpayer Assistance Order where the Advocate determines the taxpayer “is suffering or about to suffer a significant hardship as a result of the manner in which the internal revenue laws are being administered,” or where other regulatory requirements are met (IRC § 7811(a)(1)). Significant hardship is defined inclusively — see the figures table.

The thumb on the scale. “In cases where any Internal Revenue Service employee is not following applicable published administrative guidance (including the Internal Revenue Manual), the National Taxpayer Advocate shall construe the factors … in the manner most favorable to the taxpayer” (IRC § 7811(a)(3)).

What the order may require, who may undo it, and what it suspends. All three are in the figures table (IRC § 7811(b), (c), (d)).

Independent action. “Nothing in this section shall prevent the National Taxpayer Advocate from taking any action in the absence of an application” (IRC § 7811(e)), and an order or action applies to persons performing services under a qualified tax collection contract “to the same extent and in the same manner” as to the Secretary (IRC § 7811(g)).

Current figures

How it works in practice

Match the facts to a numbered reason before filing. Financial hardship is reasons 1–4, systemic failure 5–7, fair and equitable treatment 8–9. Write the Form 911 in those terms — “a delay of more than 30 days in resolving an account problem” is reason 5, and saying so beats describing frustration.

TAS is not an appeal, and using it as one wastes the client’s time. Disagreement with a determination goes to Appeals or to court. TAS exists for problems the system has failed to resolve, not for outcomes the taxpayer dislikes. The distinction is the difference between “the IRS decided against me” and “the IRS has not decided at all, or its process has broken.”

Statutory hardship and the published criteria are not the same list. The four § 7811(a)(2) items are the threshold for a Taxpayer Assistance Order; the nine published reasons are the criteria for accepting a case. They overlap heavily, but a case can be accepted without an order ever issuing, and most are. Do not promise a client an order.

The § 7811(a)(3) rule is the strongest sentence in the topic. Where an IRS employee is not following published administrative guidance, including the IRM, the Advocate shall construe the factors most favourably to the taxpayer. The most useful thing to put in a Form 911 is therefore the IRM provision the IRS did not follow, cited — it converts a complaint into a statutory presumption.

A TAO’s real power is procedural. It can require release of levied property, and can require the IRS to cease, take, or refrain from action in collection, bankruptcy and receivership, enforcement, or any other provision the Advocate names. It does not decide the liability; it buys time and stops harm.

Only three people can undo it, and each must explain in writing. The National Taxpayer Advocate, the Commissioner, or the Deputy Commissioner — and a written explanation must go to the National Taxpayer Advocate. A revenue officer cannot set aside a TAO, and a representative who is told otherwise should say so.

The limitation suspension cuts both ways. Applying suspends the limitation period on the action concerned from the application date to the Advocate’s decision, plus any period the order specifies. That protects the taxpayer’s position while the application is pending — and means the IRS’s collection clock is not running down either.

The independence disclosure is a statutory duty, not a courtesy. At the initial meeting the local advocate must say that the offices operate independently of any other IRS office and report directly to Congress; the separate phone, fax and postal address exist for the same reason. The advocate’s discretion not to disclose contact or information to the IRS is real, but it is a discretion — do not describe it to a client as confidentiality.

How this has changed

The office was made statutory in stages, each tightening its independence. Taxpayer Assistance Orders came in under the Technical and Miscellaneous Revenue Act of 1988, then in the hands of the Taxpayer Ombudsman. The second Taxpayer Bill of Rights in 1996 created the Office of the Taxpayer Advocate and broadened the hardship definition. The IRS Restructuring and Reform Act of 1998 created the National Taxpayer Advocate as it now exists — the two-year prior-employment bar, the five-year subsequent bar, the direct reports to Congress, the separate communications, and the local-office independence notice.

Section 7811(a)(3) is a 1996 addition and is still under-used. The rule that non-compliance with published guidance, including the IRM, requires the factors to be construed most favourably to the taxpayer came in with TBOR 2. It is rarely cited in practice and it is the most useful provision in the section.

Private collection agencies are covered. IRC § 7811(g), added by the American Jobs Creation Act of 2004, applies TAOs and TAS actions to persons performing services under a qualified tax collection contract “to the same extent and in the same manner” as to the Secretary. A client dealing with a private collection agency has the same TAS route.

The published criteria are the Service’s, not the statute’s. The nine reasons live on the TAS website and can be revised without legislation — the site currently notes that TAS has “made changes to the types of cases we can currently accept” because of delays. Check the criteria page rather than a remembered list. A case outside the current acceptance policy is a policy matter, not a statutory bar on § 7811 relief.

Exam focus

Know that TAS is an independent office within the IRS, that the National Taxpayer Advocate reports directly to the Commissioner and to Congress, and that at least one local advocate serves each State.

Know the three groups of criteria — financial hardship, IRS system issue, fair and equitable treatment — and that there are nine reasons in all.

Know the statutory definition of significant hardship in IRC § 7811(a)(2), and in particular the delay of more than 30 days and the significant costs including professional representation fees.

Know what a Taxpayer Assistance Order may require, that it suspends limitation periods, and that only the National Taxpayer Advocate, Commissioner or Deputy Commissioner may modify or rescind it, in writing.

Know that where an IRS employee is not following published guidance including the IRM, the factors must be construed most favourably to the taxpayer.

Know that assistance is requested on Form 911, and that TAS is not an appeal.

Check yourself

1. Which is a statutory element of “significant hardship” under IRC § 7811(a)(2)? (A) Disagreement with a proposed adjustment (B) A delay of more than 30 days in resolving taxpayer account problems (C) Inability to afford the tax (D) A pending Appeals conference Answer: B. The others are an immediate threat of adverse action, significant costs including representation fees, and irreparable injury or long-term adverse impact.

2. Who may rescind a Taxpayer Assistance Order? (A) The revenue officer’s group manager (B) Any IRS territory manager (C) Only the National Taxpayer Advocate, the Commissioner, or the Deputy Commissioner, with a written explanation (D) Only a court Answer: C. IRC § 7811(c) names all three and requires the written explanation to go to the National Taxpayer Advocate.

3. An IRS employee has not followed an IRM provision. What does IRC § 7811(a)(3) require? (A) Automatic issuance of a Taxpayer Assistance Order (B) That the factors be construed in the manner most favorable to the taxpayer (C) Referral to the Treasury Inspector General (D) Abatement of the tax Answer: B. It is a rule of construction, not an automatic remedy, and it is why the IRM citation belongs in the Form 911.

4. Which best describes the role of the Taxpayer Advocate Service? (A) A second level of appeal after the Independent Office of Appeals (B) An independent office within the IRS that helps taxpayers resolve problems the system has not resolved (C) A body outside the IRS that reviews determinations (D) The office that issues notices of deficiency Answer: B. It is inside the IRS but independent, and it is not an appeal of a determination.

5. What happens to a limitation period when a taxpayer applies for a Taxpayer Assistance Order? (A) Nothing (B) It is suspended from the application date to the Advocate’s decision, plus any period specified in the order (C) It is extended by one year (D) It restarts Answer: B. IRC § 7811(d), and it applies to the actions described in § 7811(b).