Tax Brake with Robert G. Nath, Esq.

Some not-so-surprising but astonishing facts: In a Quality Review of decided cases, overall the quality control people disagreed with the decisions 18% of the time. Where an agent granted relief, the quality people said the agent was right 75% and wrong 25% of the time. Where the agent denied relief, the quality people said the agent was correct about 90% of the time.

The horrendous part is the agonizing delay in getting a case decided. In 2001, the AVERAGE wait time in cases worked in field audits was 442 days! (Remember, that's an average). In cases worked at the central site in Kentucky, it was 176 days. Partly this reflects the influx of new cases. In 1999, the first year after the law was liberalized, 44,000 cases were received. In 2000 and 2001, the numbers were 57,000 and 50,000. The “inventory” as of the report date was about 30,000 cases.

The report also concluded that the IRS' website for education of taxpayers on innocent spouse rules has not been evaluated for effectiveness. In short, the IRS does not know if it's working well. The GAO urges greater use of the site with better software.

The report also notes how few innocent spouse cases go to court. Only a total of 54 over the past six years in the US Tax Court (where most would normally be heard). Even fewer make it to courts of appeal. Interestingly, the win rate for IRS in those 54 cases was 63%. Of course, most other cases were settled before actual trial or decision, but even there, the numbers were only in double digits for each year involved.

The GAO report confirms the wisdom of settling or proving your innocent spouse case at the earliest possible level. It also points out, however, that processing of these cases is becoming more “automated,” and that if you believe you have been the victim of an incorrect decision, you have the numbers on your side for an appeal.