Among the items discussed are the problems she and her staff perceive with respect to the IRS's implementation of the voluntary disclosure programs for offshore accounts. Most of her specific angst appears directed to the IRS's "bait and switch" on OVDP 2009 FAQ 35. Readers of this blog already know of the bait and switch and the NTA's disapproval. See particularly Tax Notes Discusses Dispute Between the Taxpayer Advocate and the IRS About OVDP 2011 (1/6/12), here.
The NTA's comments in the report are contained in the International Issues section here. The key portions of the International Issues section that I picked up on quick search are:
U.S. Taxpayers Abroad Face Challenges in Understanding How the IRS Will Apply Penalties to Taxpayers Who Are Reasonably Trying to Comply or Return into Compliance (beginning on p. 191)
The Potential for Strict Application of FBAR and Other Penalties Causes Unnecessary Stress and Fear Among Benign Actors Who Made Honest Mistakes.(beginning on p. 195).
The IRS’s Offshore Voluntary Disclosure Program “Bait and Switch” May Undermine Trust for the IRS and Future Compliance Program (beginning on p. 206)
JAT Note: This has a full discussion of the voluntary disclosure and bait and switch on OVDP 2011 FAQ 35 and the OVDI 2011 counterpart. Here is the conclusion for this section on on p. 221.
The 2009 OVDP appears to have been a great deal for those engaged in criminal tax evasion. They were not affected by the IRS's “clarification” that it would not consider nonwillfulness, reasonable cause, or the mitigation guidelines in applying the offshore penalty because their violations were willful and unlikely to qualify for mitigation. However, the IRS Is perceived as having “reneged on” the terms of the 2009 OVDP that would benefit taxpayers whose violations were not willful. Many felt that the IRS placed them in the unacceptable position of having to agree to pay amounts they did not owe or face the prospect the IRS would assert excessive civil and criminal penalties. This perceived reversal burdened taxpayers, wasted resources, violated longstanding IRS policy, opened the IRS to potential legal challenges, and was not properly disclosed as required by FOIA. it also damaged the IRS's credibility. As a result, it is likely to have more difficulty gaining participation in any future settlement initiatives.