Disenfranchising taxpayers
“What really impacts older Americans is that the IRS is moving away from face-to-face service, because it is the most expensive to maintain, and steering people to the Internet. While that works for some, many older adults really prefer to do this face-to-face, or at the very least on the phone,” says Olson.
“TAS believes we have to represent everyone, not just people who can access the Net. Besides, just because you can access it, doesn’t mean you can navigate the system,” she adds.
Now Olson says taxpayers have another reason they may need the TAS’s help. “In 1997, Congress gave the IRS authority to levy Social Security payments and any federal payment (like a pension). Called the Federal Payment Levy Program, it means the IRS can levée 15% of your Social Security forever, or at least until a debt is paid,” she says.
“For many older people Social Security is 50% of their income and for about 20% Social Security is all they are living on. So you know a 15% levy can mean the difference between paying for food or medicine— and that’s a recipe for disaster,” she adds.
Other ways trouble occurs
While it isn’t unusual for the taxpayer to be at fault when filling out and filing tax returns, it is unusual for that taxpayer to be truly trying to commit fraud.
In a report just this past fall to Congress, Olson noted that among all reporting errors identified during IRS audits of 46,000 taxpayers, “67% had made an inadvertent mistake and 27% had made a computational error or an error that flowed automatically from the previous one. Only 3% had made an intentional mistake.”
Olson says most taxpayer problems in TAS usually result from one of two things:
An economic burden—
A disaster, ill health, or sheer economic hardship forcing you to fall behind or totally miss your payment(s).
A systemic burden—
Something the IRS is doing stymies you, e.g., the process is taking longer than the agency said (and running up your interest/penalties) or you haven’t gotten any responses.
Sometimes sheer ignorance causes the problem. “One spouse dies and that person took care of all the tax matters. The survivor didn’t even know there was a tax problem, and suddenly they have the IRS knocking on the door,” says Olson.
What NOT to do
Unfortunately, Olson says, IRS communications often come at the very worst times in people’s lives. Sometimes it is bereavement, as previously indicated; other times it is a period of desperate economic hardship. “I’m a tax attorney and I prepared income tax returns for 27 years (including setting up a low-income taxpayer clinic in Virginia). I used to represent people who had stacks of notices; they never opened them,” she says.
The worst thing you can do, she points out, is try to ignore the agency. “Open that letter, don’t be scared. Try to read it. If it isn’t clear, call the number on the letter and ask them to explain it. If you don’t respond, the IRS will come after you. It is never going to go away,” she says.
Steps to take
If you think you are the victim of a levy (or for any reason at all), call the IRS. “Sometimes if you have a hardship, either the IRS won’t levy you or give back on the levy. And if not, that’s the perfect example of when TAS can help” says Olson.
Ultimately, make sure you have the paperwork the IRS sent and any proof you can offer. “You are required to keep your records three years; six if you have severely underestimated,” says Olson. And remember, don’t stall; call as quickly as possible.