We welcome back guest blogger Anna Gooch, who last year joined the the Center for Taxpayer Rights as a Research Fellow. Next fall Anna will begin a Christine A. Brunswick Public Service Fellowship sponsored by the ABA Tax Section, where she will continue working to further taxpayer rights. Christine
Under a grant from the Rockefeller Foundation, the Center for Taxpayer Rights has developed a survey of state tax administration practices and procedures to better understand how taxpayer rights are protected. The survey gathers information relating to income tax (where applicable), property tax, sales tax, and any other statewide tax that the state may have. In each of these sections, the questions are divided into categories, including Assessment, Appeals, Collection, and Litigation. Volunteers are asked to provide an explanation as well as a citation to their response when possible. Once the information is collected, we will make recommendations for administrative procedures for practices that work well, and we will propose model legislation for state funding of low-income taxpayer clinics and the establishment of state taxpayer advocate/ombuds offices. We will also identify areas of deficiency in taxpayer protections and advocate for change where we believe taxpayer rights are in jeopardy. The Center plans to hold a Reimagining Tax Administration workshop in the fall of 2022 to discuss the survey findings and recommendations.
”readWhy do a state taxpayer rights survey? Unlike the federal government, states often operate under balanced budget requirements and cannot create money, so they rely heavily on tax collections to provide services and programs. They do not have the same infrastructure for tax compliance as the federal government, so they also rely on the IRS to identify taxpayers with audit issues and make parallel adjustments, and they utilize private debt collection agencies to a great extent. Moreover, states heavily rely on data mining to identify non-compliance and issue automated notices; this approach places burden on taxpayers, especially those who are low income. Most states do not provide the same protections and collection alternatives for taxpayers experiencing economic hardship; several states automatically file notices of tax liens when a debt arises and others revoke drivers’ licenses if a tax debt is above a certain dollar amount.
With the help of the LITC community and the ABA’s State and Local Tax Committee, we have spent the last several months recruiting volunteers to complete the survey for each state. The survey was sent to the first group of volunteers in early January, and we are starting to receive completed responses. As of this writing, we have received responses for five states: Alabama, Illinois, New Jersey, Utah, and Texas. While it is too soon to make any conclusions, I am happy to share some preliminary data from the first few responses. The survey contains about 200 questions in total, but below are some key findings that I find particularly interesting.
Of the five states for which the Center has received a response:
- Two regulate commercial return preparers (Alabama, Illinois).
- All regulate property appraisers.
- Four use private collection agencies for income tax debts (Illinois, New Jersey, Utah, Texas).
- One state funds LITCs to help taxpayers with state tax issues (Illinois).
- All have physical locations where taxpayers can receive assistance from the tax agency.
- Only one state offers forms and guidance in languages other than English (Texas).
- Three have state taxpayer advocates that may help taxpayers with income tax and sales tax issues (Alabama, New Jersey, Utah). One has a taxpayer advocate office that may assist taxpayers with property tax issues (Utah).
- All have a taxpayer bill of rights.
There are still a few states for which we are seeking volunteers. Those states are:
- Hawaii
- Montana
- Nevada
- North Dakota
- Oklahoma
- Vermont
- West Virginia
- Wisconsin
- Wyoming
If you would like to complete the survey for any of the states listed above (or if you know someone else who may be interested), please email anna@taxpayer-rights.org. As noted above, we plan on holding a workshop in the fall to share our findings, as well as best practices and recommendations. Thank you to our volunteers – this project would not be possible without your assistance.