Taxpayer Advocacy Panel Releases 2006 Report

The IRS's Taxpayer Advocacy Panel, a federal advisory group, has released its 2006 Taxpayer Advocacy Report.  Here's the description of the group, which was consolidated in 2002 from various regional advisory panels.

The Taxpayer Advocacy Panel (TAP) was established to improve IRS responsiveness to taxpayer needs and to provide advance input on key program changes that impact customer service. TAP is an independent advisory group, established in conformance with the Federal Advisory Committee Act (FACA), with volunteer members from all over the country appointed by the Secretary of the Treasury to represent each state, the District of Columbia, and Puerto Rico.

Each member of TAP serves on area and issues committees, with the goal of bringing to IRS attention taxpayer concerns and advocating for solutions to those problems.  This year, the TAP also hosted seven town hall meetings with the National Taxpayer Advocate.

The TAP report sets out 58 recommendations.  Here's a sample.

• eliminate or improve From 2553 for Subchapter S elections, so that S corporations more accurately file their returns (improving forms is always a good idea; one wonders if the number of non-elections is due to lots of sloppy tax advisers that need to be better regulated)
• cross-reference W-4 and W-4P so employees understand the relationship between withholding on wages and on pensions (good idea!)
• encourage corporations to inform their employees about the Earned Income Tax Credit (a letter to corporations to encourage them to inform their employees about EITC might be a waste of government effort if there is no requirement; corporations that care about employees probably already inform them of the program)
• develop less burdensom alternatives for determining the home office deductions  (I suspect that many homeowners take home office deductions that would not be correct if thoroughly audited, so I would add that any simplification should require vigorous substantiation)
• require only summary reporting on securities trading (I disagree strongly with this recommendation, because this is an area subject to considerable taxpayer manipulation and in fact more detailed reporting may be necessary)
• suggestion that all IRS notices that require response by a due date include a prominent notice on the outside of the envelope "Timely Response Required" (sounds very reasonable to me!)