TAS is an independent office within IRS created to assist taxpayers in resolving problems with IRS, identify areas in which taxpayers have problems in dealing with IRS, and propose administrative and legislative changes to mitigate such problems. TAS is the successor to the Problem Resolution Program (PRP) which IRS founded in 1976 to provide an independent means of helping taxpayers solve problems that they encountered in dealing with IRS. Initially, PRP units were established in IRS district offices. In 1979, IRS expanded PRP to its service centers and created the position of Taxpayer Ombudsman to head PRP. Generally, PRP personnel were district or service center employees who did not report directly to the Ombudsman. The Ombudsman was appointed by and reported to the Commissioner of Internal Revenue. Congress has since renamed the Ombudsman the “National Taxpayer Advocate” and taken steps to enhance the independence of the Advocate. While the Advocate continues to report to the Commissioner of Internal Revenue, the Advocate is now appointed by the Secretary of the Treasury after consultation with the Commissioner of Internal Revenue and the IRS Oversight Board. In the IRS Restructuring and Reform Act of 1998, Congress required that the individual not be an IRS employee for 2 years preceding his or her appointment and that the individual agrees to not accept a position elsewhere in IRS for 5 years following his or her tenure as the Advocate. In addition, Congress replaced the prior PRP organization with an independent reporting structure of taxpayer advocates who report directly to the Advocate and mandated that a local taxpayer advocate be available to taxpayers in each state. TAS currently has 65 local offices with at least one in each state, Puerto Rico, and the District of Columbia. TAS also has 10 offices located at IRS campuses. The current Advocate was appointed in 2001. Section 7803 of the Internal Revenue Code, as amended by the Restructuring Act of 1998, provides that the National Taxpayer Advocate is entitled to compensation at the same rate as the highest rate of basic pay established for the Senior Executive Service under 5 U.S.C. Section 5382 or, if the Secretary of the Treasury so determines, at a rate fixed under the streamlined critical pay authority set out in 5 U.S.C. § 9503 (up to the equivalent of the Vice President’s salary, or $212,100 in 2006). The Advocate is also eligible to receive bonuses. On January 10, 2001, the Secretary of Treasury approved the appointment of Nina Olson as the National Taxpayer Advocate under section 7803 and chose to set her pay using the streamlined critical pay authority. The Advocate’s salary was $162,100 and her bonus was $22,900 in 2006. TAS has two primary functions—case advocacy and systemic advocacy, although it is also responsible for administering the Low Income Taxpayer Clinic (LITC) Grant Program and overseeing the Taxpayer Advocacy Panel (TAP). Figure 1 shows TAS’s primary functions as well as sources of work. TAS receives case advocacy cases through several sources including referrals from IRS, direct taxpayer contact via walk-in, phone calls, or mail, and the National Taxpayer Advocate toll-free line. The acceptance criteria for case advocacy fall into four general categories: economic burden, systemic burden, best interest of the taxpayer, and public policy. Economic burden cases involve a tax-related issue that has caused financial difficulty for the taxpayer. Procedural burden cases involve an IRS process, system, or procedure that has failed to operate as intended and, as a result, IRS has failed to resolve or respond to the taxpayer issue. Best interest of the taxpayer cases are those that raise questions of equity or taxpayer’s rights in how the tax laws are administered. Finally, public policy cases are those that the Advocate decided should be worked based on specific issues or areas of public concern. TAS uses TAMIS to track its case advocacy activities. In some cases, TAS is able to use its statutory or delegated authorities to take the necessary steps to resolve a case. When TAS does not have statutory or delegated authority to take action, TAS issues an Operations Assistance Request (OAR) to the function within IRS that can take the needed action to resolve the taxpayer’s problem. If IRS and TAS are unable to agree on the proper course of action, TAS might use a Taxpayer Assistance Order (TAO) to require IRS to take a certain action as permitted by law, cease an action currently being taken, review an action, refrain from taking any action, or release property previously levied. In fiscal year 2006, TAS issued 46 TAOs. Figure 2 provides an overview of the case advocacy process. Currently, TAS and IRS are renegotiating the procedures TAS and IRS functions will follow to process an OAR. Also, officials told us that the Advocate has reviewed TAS’s delegated authorities with Office of Chief Counsel, Appeals, Tax Exempt/Government Entities, W&I, and SB/SE officials and plans to make recommendations to the Commissioner on possible changes. TAS receives suggestions for systemic advocacy projects from TAS and IRS employees and the public. Systemic advocacy officials evaluate each suggestion to determine if it meets the definition of an immediate intervention—an administrative issue which could cause immediate, significant harm to multiple taxpayers that needs quick resolution. For those issues that do not become immediate interventions, systemic advocacy officials apply the general criteria described in figure 1 in order to score each issue. TAS creates a systemic advocacy project for those issues that meet or exceed the current threshold for converting an issue into a systemic advocacy project. This threshold can change depending on available resources to work on systemic advocacy projects. For immediate interventions and advocacy projects, systemic analysts research the issue and develop recommendations for IRS. For additional details about creating immediate interventions and systemic advocacy projects including a complete list of the criteria used to score systemic issues, see appendix II. TAS also conducts systemic advocacy through participation in TAS and IRS research initiatives and task forces, hosting town hall meetings, conducting focus groups, and through TAS’s two required annual reports to Congress. One of the two reports, the annual report to Congress, hereafter referred to as the annual report, is due by December 31, and summarizes TAS’s activities during the prior fiscal year. It must include, among other things, a discussion of at least 20 of the most serious problems encountered by taxpayers and administrative and legislative recommendations for resolving taxpayer problems. For details about how the most serious problems are selected, see appendix IV. The other report, due by June 30 of each year, must identify the objectives of the Office of the Taxpayer Advocate for the fiscal year beginning in that calendar year. Responsibility for the LITC Grant Program was transferred from W&I to TAS in May 2003. The IRS Restructuring and Reform Act of 1998 established the LITC Grant Program to help accredited academic institutions and nonprofit organizations represent low-income taxpayers in controversies with IRS and operate programs to inform individuals for whom English is a second language about their rights and responsibilities. TAS has responsibility for selecting LITC grant recipients and conducting site visits to ensure that LITCs are fulfilling their obligations. See appendix V for more information on the LITC Grant Program. TAS also has responsibility for overseeing the TAP, which was established in October 2002 under the Federal Advisory Committee Act as a way of improving IRS responsiveness to taxpayers’ needs. The panel, consisting of approximately 104 volunteers nationwide including every state, Puerto Rico, and the District of Columbia, provides input on IRS’s strategic initiatives and provides a venue for raising issues identified by citizens. TAS’s budget is part of the overall IRS appropriation and does not have a separate line item in the budget. TAS resources are spread across three appropriations: processing, assistance, and management; tax law enforcement; and information systems. TAS’s budget increased from about $135.4 million in fiscal year 2001 to about $170.3 million in fiscal year 2006. Over 86 percent of TAS’s fiscal year 2006 budget was for its case advocacy function, while the rest was split between systemic advocacy, the LITC Grant Program, TAP, and other expenses such as training, travel, and support. TAS’s full-time equivalent (FTE) staff years decreased slightly from 2,064 in fiscal year 2001 to 1,894 in fiscal year 2006. Table 1 summarizes TAS’s budget and staffing. The growth in TAS’s caseload was not uniform over types of taxpayer problems, but was correlated with increases in IRS enforcement activity. After decreasing from fiscal years 2002 through 2004, TAS’s case receipts increased 43 percent from fiscal year 2004 to 2006, as shown in figure 3. Case receipts increased by 28,660 cases or 17 percent in fiscal year 2005 over fiscal year 2004 and another 45,021 cases or 23 percent in fiscal year 2006. Since fiscal year 2004, by comparison, TAS staffing decreased by 171 FTEs as was shown in table 1. Figure 3 also shows that the number of cases that TAS closed each year followed a similar pattern as case receipts, with declines in fiscal years 2002–4 and increases in fiscal years 2005 and 2006. In the earlier years the closure rate exceeded the number of cases coming in, so TAS was decreasing its backlog of cases. In fiscal years 2005 and 2006, however, TAS closed fewer cases than it received, and its backlog of cases increased by around 7,500 cases in each of those years. TAS officials said that the growing number of cases is posing a challenge to staff, but that the challenge has not become overwhelming. The growth in TAS’s caseload after fiscal year 2004 varied across types of taxpayer problems.