The IRS has recently been chafing against a law that requires its agents receive approval from a supervisor before they are allowed to assess penalties on taxpayers. A number of agents have ignored this rule, and now the IRS is facing multiple court cases challenging penalties on the grounds that they lacked supervisory approval or even fraudulently backdated penalty approval documents. Now, the IRS has put forth a reform that aims to significantly weaken the supervisory approval requirement, effectively stacking the deck in their favor. National Taxpayers Union was the only taxpayer advocacy group to file comments requesting a public hearing for the rule, which was held earlier this week. NTU’s President Pete Sepp and NTU Foundation Attorney Lindsey Carpenter testified at the hearing to fight for taxpayer rights and emphasize the importance of the supervisory approval requirement.
“I staffed our representative... on the National Commission on Restructuring the IRS back in 1996-97, and I can attest that even back then, penalty administration and maladministration was a very controversial topic... One of the things that was conceived under section [6751(b)]... was not just that this was to protect taxpayer rights in the process, but to save the IRS resources.” NTU President Pete Sepp explained. “[Section 6751(b)] provides a preventative, rather than a reactive, tool for taxpayers rights and good tax administration.”
NTUF Attorney Lindsey Carpenter made clear a number of issues that NTUF had with the IRS’s proposal, including the ability for the IRS to exempt any penalty calculated through a computer from the supervisory approval requirements, in addition to changing the definition of an approved supervisor. This would mean that just about any IRS agent could approve penalties arbitrarily, with very little oversight needed. If the IRS does not heed NTU’s warnings, taxpayers who do their best to follow the law and file their taxes properly can expect to see more penalties coming their way, not just tax cheats as the IRS claims.
To speak with NTU President Pete Sepp or NTUF Attorney Lindsey Carpenter about the IRS supervisory approval requirement hearing, please contact NTUF Vice President of Communications and Outreach Kevin Glass at 703-683-5700 or kglass@ntu.org.