IRS Reflects on Its Own Website’s Limitations – A Cautionary Tale for U.S. Expats

For many U.S. taxpayers, the first and most obvious place to look for information and understanding into the sometimes complicated U.S. tax reporting rules is the IRS’s website. A quick look at the website shows that the IRS has dedicated a lot of effort and resources into bolstering its online presence.

What unsuspecting visitors don’t quite get is that the website’s informational pages are meant to be just that - informational, not authoritative. A recent blog post by the IRS’s own National Taxpayer Advocate demonstrates that over reliance on the website is in some ways the IRS’s own fault, resulting in unfair consequences for tax filers.

IRS Looking at the Taxman in the Mirror

In the self-reflective blog, IRS National Taxpayer Advocate Nina Olson gives a number of insights into how the IRS’s website fits into the grand scheme of tax authoritativeness (I’m pretty sure that’s a word).

Olsen basically differentiates between the strongest authorities, such as Treasury regulations, medium-strength authorities, such as official published guidance, and non-authorities, such as unofficial publications, press releases, and tax forms and instructions.

Informational offerings on the website such as FAQ pages, according to Olsen, fall into the third category, so they should not be relied upon as the be all and end all of tax understanding.

Olsen’s reflection on the website’s limitations is especially important for those with complicated filings, such as U.S. expats filing late returns. Case in point - Olson’s blog acknowledges that the website has caused particular problems for late filers who are finding conflicting information on the IRS’s website with respect to its tax amnesty programs.

And Asking Him To Change His Ways

Expat tax firms have taken notice of some of the inconsistencies on the website, particularly with respect to the amnesty programs.

Joshua Ashman and Ephraim Moss of Expat Tax Professionals, a leading firm in the field of expat taxation, remarked that, “Since the amnesty programs are not currently codified in statues or promulgated in regulations or official guidance, taxpayers are left to rely on the IRS website and its FAQ pages to understand the program’s requirements and implications. The IRS does usually place a disclaimer that its FAQ pages are informational and that the content on the page can be changed at any time. But this is hardly comforting for taxpayers looking for clear and finalized rules for rectifying delicate circumstances.”

Moss and Ashman added that, “The problem, we feel, is further exacerbated by the fact that at the bottom of IRS web pages, you’ll usually see a statement such as, ‘Page Last Reviewed or Updated on…’ A very recent date is then included even if the page is describing a program or set of rules that applied previously but is no longer current law or currently applicable.”

IRS Should Take a Look at Itself and Make a Change

In the blog, Ms. Olson recommends two basic changes – the first being more informative disclaimers and the second being a major push towards codifying or at least officially publishing rules that significantly affect many taxpayers. This would add certainty and finality to rules and increase compliance and disclosure in the long run.

With the IRS website in its current state, it’s probably best not to rely or at least over-rely on the site. It may make more sense to pick up the phone and call a tax preparer or expert that can give you the full low down on the rules that apply to you. For late filers facing penalties or expats with more complicated issues, this is all the more true.

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