What is the National Taxpayer Advocate Purple Book?

Each year, the Taxpayer Advocate Service (TAS) presents legislative recommendations to Congress as part of its Annual Report. TAS recently delivered its recommendations for 2024 to the legislature.

The TAS “Purple Book” takes its names from a mixing of partisan interests. The TAS office itself is a bipartisan, independent unit with the Internal Revenue Service that works to ensure that taxpayers receive fair and full treatment by the IRS. The TAS works directly with taxpayers involved in challenges with the IRS.

As part of its service, TAS develops and delivers legislative recommendations each year to Congress. These recommendations highlight ways in which TAS believes taxpayers can be better served by the IRS. This year there are 66 recommendations for Congress. Just three of these common-sense recommendations for 2024 include:

1) Require the IRS to process claims filed for a refund or a credit

Believe it or not, there is no law that the IRS processes claims of this nature. When the agency ignores these requests, it falls to the taxpayer to file a lawsuit for their refund in district court. As TAS notes, “The absence of a processing requirement is a poster child for non-responsive government.” Many filers will be unaware that the IRS is not required to process their claim, and may not know their next step. Further, taking a claim against the IRS to court is time-consuming and can be costly. While the IRS does usually process these claims, it may not necessarily do so in a timely way. Seems like a clear requirement and deadline to process claims of this type is long overdue.

2) Failure to file? TAS asks for extension of reasonable cause defense if your preparer does not e-file your return on time

Currently, there is a 25 percent penalty assessed for taxpayers who fail to file their return on time. But, if the taxpayer can show there was reasonable cause why the return was not filed on time, the penalty can be excused. At present, that penalty is not excused for taxpayers whose tax return was not electronically filed on time. TAS recommends otherwise.

3) Require an IRS supervisor sign-off on proposed taxpayer penalties

If you are assessed a penalty by the IRS, you might think the penalty was reviewed prior to but not necessarily so. At times, the assessment may not be approved in writing by a supervisor until the case is already in litigation. The imbalance means taxpayers cannot count on the accuracy of penalty assessments unless they hassle with the IRS in court—a step most taxpayers prefer not to take. TAS recommends that proposed penalties receive written approval by a supervisor before the taxpayer is issued a penalty notice.

Despite the straightforward nature of recommendations by the TAS on behalf of taxpayers, Congress is not obliged to take their suggestions. If you are involved in a tax dispute, or charged with tax fraud by the IRS, speak with experienced legal counsel before you consider going to court with the IRS.

Speak with an experienced tax attorney when you have questions about tax litigation or an IRS audit letter

Robert J. Fedor Esq. LLC serves local, domestic, and international clients challenged by tax litigation, criminal tax allegations, and offshore tax inquiries. When you need strategic, experienced guidance regarding the IRS, call 440-250-9709 or contact us online today.  We have offices in Cleveland and Chicago.