Moving Tax Disputes Online Without Leaving Taxpayer Rights Behind
The Tax Lawyer, Vol. 74, No. 1, 2020
43 Pages Posted: 1 Dec 2020 Last revised: 9 Feb 2021
Date Written: November 12, 2020
As the Service’s technological infrastructure continues to show its age, both the Service and Congress appear to be recognizing the importance of the Ser-vice having technological infrastructure that allows it to take advantage of the capabilities of modern computing systems to improve both its enforcement and service efforts. The National Taxpayer Advocate has entered this conversation as well, encouraging Congress and the Service to prioritize improvements to the Service’s technological infrastructure but simultaneously raising legitimate concerns about the impact that an overreliance on technology might have on taxpayer rights, particularly rights of vulnerable population groups who may not be able to utilize technology.
Fortunately, increasing technological deployment as part of taxpayer service is not a zero sum game that requires sacrificing taxpayer rights in the name of efficiency. The Service can accomplish the goal of deploying technology in a pro-taxpayer rights manner if it brings considerations of affirming taxpayer rights to the forefront of its deliberations about how best to utilize technology. Both the academic literature and Service strategic documents have focused on a wide variety of taxpayer interactions with the Service in proposing how this can be done. There is one type of interaction, however, that has thus far been underexplored both in the academic literature and in the Service’s strategic efforts to move more of its taxpayer interactions online: taxpayer controversy resolution.
This Article argues that the Service has insufficiently considered whether it can increase its use of technology-based interactions with taxpayers in the controversy-resolution process in a manner that both achieves efficiency gains and affirms taxpayer rights. Specifically, three areas in controversy resolution could lend themselves to such rights-affirming technological implementation.
First, the Service should focus on how to provide online information about notices sent to taxpayers. These notices exist at the time at which taxpayer rights and the Service’s dual roles as an enforcement and service agency inter-sect the most, given that these notices bring taxpayers into a direct controversy with the Service, are often difficult to understand, and frequently re-quire a specific taxpayer response to avoid a waiver of rights. Second, the Service should focus on improving its ability to allow taxpayers to satisfy their tax obligations online, including the limited use of algorithmic decision-making for routine disputes. Judicious use of online dispute resolution provides the government efficiency benefits while safeguarding taxpayer rights. Third, to address justice gaps that would remain if it addresses the first two areas, the Service should focus on developing partnerships with the nonprofit and academic sectors designed to produce new innovative technological platforms that might enhance taxpayer access to information and dispute-resolution tools.
These proposals would allow the Service to resolve controversies more quickly and prioritize the allocation of its personnel for dispute-resolution and customer-service issues that do not lend themselves to online resolution. In addition, these proposals can help taxpayers receive quality service and ensure that taxpayers do not have to pay more tax than they are either legally required or can economically afford to pay. Consequently, these proposals will allow the Service to move more of its controversy-resolution service and enforcement efforts online without abandoning the very taxpayer rights it is entrusted to protect.
Note: This is an article published by the American Bar Association Section of Taxation in The Tax Lawyer journal in the Fall 2020 issue.
Keywords: taxation, taxpayer bill of rights, internal revenue service, tax procedure, tax dispute resolution, earned income taxpayer credit, eitc, offers in compromise, collection due process, online dispute resolution, low-income taxpayers, access to justice, law and technology
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