At the request of three Idaho state senators, the Idaho Office of Performance Evaluations (OPE) has undertaken a study to determine how the Idaho State Tax Commission might create an IRS-styled department of taxpayer advocacy.
“We are at the very beginnings of our research on this,” Rakesh Mohan, director of OPE told IdahoReporter.com. “We hope to have it done within the next few months, hopefully by the end of this month.”
In March, Sens. Bert Brackett, R-Rogerson, and Les Bock, D-Boise, along with Senate President Pro Tem Brent Hill, R-Rexburg, sent a formal letter to the Joint Legislative Oversight Committee (JLOC) requesting that OPE conduct an evaluation of the Idaho State Tax Commission.
The OPE is an agency of the Idaho state government. Its mission is “to promote confidence and accountability in state government through professional and independent assessment and evaluation of state agencies, programs, functions, and activities.” In other words, the OPE regularly conducts research and evaluations of other state agencies, usually at the request of elected members of the Legislature, and conducts its evaluations as a means “to improve government performance and accountability.”
“The request from the senators is quite clear,” Mohan said. “We’ll be examining tax filing issues, tax complaint issues, we will talk to various stakeholders; we may do focus groups or conduct a survey, we haven't decided precisely yet, but our evaluation will be thorough. We will determine whether or not we need an office or a department of taxpayer advocacy, and if there is a need, we’ll determine what the best practices are for this. We’ll consider how other states provide for taxpayer advocacy, and we’ll also consider how the IRS provides taxpayer advocates as well.”
Bock, an attorney, who has in the past practiced taxation law, told IdahoReporter.com that “this is an issue that is near and dear to my heart.” He concurs with Mohan’s thoughts about the IRS possibly setting an example for the Idaho State Tax Commission for how to do taxpayer advocacy, and says that “over the years I’ve done a fair amount of legal work representing people to the commission. I think it’s a widely held sentiment among practitioners, both attorneys and accountants, that most of us would rather deal with the IRS than our own state tax commission. I suspect that Sen. Hill (an accountant) would agree with me on this.”
Bock noted that the IRS has what he characterizes as “fairly detailed and predictable procedures” that it follows. “For the most part, you know what to expect when you deal with the IRS. But unfortunately with our state tax commission, there is a tendency for them at times to get lost in the minutia, and the taxpayer loses in these instances.”
On the other hand, Bock added that the amounts at issue in disputes with the tax commission are usually quite lower than the dollar amounts involved with IRS, yet a dispute with the state commission can potentially create greater hardship for the Idaho taxpayer.
“For example, you might get somebody who has a dispute with the tax commission, and they may need to spend $5,000 to fight that dispute when their bill from the commission is only, say, $2,000. Some people will fight the commission out of principle, but most will not. People in these situations know that the commission is wrong, but they really can’t do much about it. They just cave in, pay the penalty and move on, and that’s not right.”
Bock envisions that in order to provide taxpayer advocacy services, the tax commission will probably need to hire more staff and perhaps open additional offices around the state. He said that the advocates will need to maintain “independence.”
IdahoReporter.com asked “How can taxpayer advocates maintain independence from the state tax commission when they are employed by the state tax commission?”
“That’s a good question and a very legitimate question,” Bock replied. “What I can tell you is that the IRS provides taxpayer advocates who, in cases of disputes, quite often side with the taxpayer and not with the agency. As an attorney who represented clients before IRS taxpayer advocates, I’d estimate that I won the dispute for my clients 75 percent of the time. The IRS sets a good model for how to do taxpayer advocacy, and our state needs to seriously consider it, and the independence needs to be built in to the process.”
Mohan says that the IRS approach to taxpayer advocacy is a key to his evaluation and information gathering efforts, but he still intends to look at other state governments in seeking examples for taxpayer advocacy efforts. He also noted that he will be updating the JLOC committee on his findings at a meeting scheduled for June 12.