Controls Over Offset Bypass Refunds Processed by the Taxpayer Advocate Service Should Be Improved to Reduce the Risk of Abuse and Allow for More Consistent Treatment of Taxpayers

The National Taxpayer Advocate should consider assigning OBRs to specialized teams or individuals in an effort to ensure more consistent treatment of taxpayers.

The National Taxpayer Advocate should update the IRM to a) require case advocates to include details in the TAMIS history on how the OBR amount was computed, b) provide general guidelines and factors to consider when assessing if the taxpayer's circumstances warrant an OBR, c) provide general parameters as to what types of expenses should generally be allowed and not allowed, and d) establish criteria for when additional validation of taxpayer-provided documentation is needed, as well as procedures for validating supporting documentation.

The National Taxpayer Advocate should establish a process, similar to the one employed by the Fresno LTA, enabling the review and consideration of various factors before approving OBRs. This could include, but not be limited to, a review of the IDRS to determine the cause and amount of the balance due, whether collection statutes are imminent, the existence of nontax debts, the number of prior OBR requests, and the current collection status.

The National Taxpayer Advocate should require case advocates to document case histories to describe the circumstances that prevented the timely issuance of the OBR when it is issued outside of established time frames.

The National Taxpayer Advocate should update the TAS Internal Revenue Manual pertaining to OBR requests to address instances in which taxpayers requested direct deposits on their tax returns and require case advocates to document their decision as to the method chosen to issue the OBR.