On March 31, the IRS issued final regulations governing National Taxpayer Advocate taxpayer assistance orders when a taxpayer is suffering hardship because of the way the IRS is administering the tax laws (T.D. 9519).
Under Sec. 7811 the National Taxpayer Advocate can issue a taxpayer assistance order if the National Taxpayer Advocate “determines the taxpayer is suffering or about to suffer a significant hardship as a result of the manner in which the internal revenue laws are being administered” by the IRS and the law and the facts support relief. A taxpayer assistance order can direct the IRS to take a specific action, cease a specific action, or refrain from taking a specific action or can order the IRS to review at a higher level, expedite consideration of, or reconsider a taxpayer’s case.
Specifically, the National Taxpayer Advocate may issue a taxpayer assistance order ordering the IRS within a specified time to (1) release levied property or (2) cease any action, take any action as permitted by law, or refrain from taking any action with respect to a taxpayer. The regulations also specify that where Sec. 7811 does not authorize the issuance of a taxpayer assistance order to order a specific action, if the National Taxpayer Advocate determines that the taxpayer is suffering or about to suffer a significant hardship and that the issuance of a taxpayer assistance order is appropriate, the National Taxpayer Advocate may issue a taxpayer assistance order seeking to expedite, review, or reconsider an action at a higher level.
A taxpayer assistance order can be issued to any operating division or function of the IRS. However, due to the sensitivity and importance of criminal investigations, the regulations provide that a taxpayer assistance order may not be issued to the IRS Criminal Investigation Division if the action ordered in the taxpayer assistance order could reasonably be expected to impede a criminal investigation.
The final regulations issued provide guidance on what constitutes “significant hardship.” Significant hardship means “serious privation caused or about to be caused to the taxpayer” and includes “(A) An immediate threat of adverse action; (B) A delay of more than 30 days in resolving taxpayer account problems; (C) The incurring by the taxpayer of significant costs (including fees for professional representation) if relief is not granted; or (D) Irreparable injury to, or a long-term adverse impact on, the taxpayer if relief is not granted” (Regs. Sec. 301.7811-1(a)(4)(ii)). The final regulations provide examples of significant hardship.
The regulations clarify that a finding by the National Taxpayer Advocate that a taxpayer is suffering or about to suffer a significant hardship will not automatically result in the issuance of a taxpayer assistance order. The National Taxpayer Advocate must then determine whether the facts and the law support relief.
The regulations explain that the IRS will comply with the terms of a taxpayer assistance order unless it is appealed and then modified or rescinded by the IRS Commissioner or Deputy Commissioner or by the National Taxpayer Advocate. The regulations also clarify that a taxpayer assistance order is not intended to be a substitute for an established administrative or judicial review procedure, but rather is intended to supplement these procedures if a taxpayer is about to suffer or is suffering a significant hardship.
Requests for a taxpayer assistance order are to be made on Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), or in a written statement that provides sufficient information for the Taxpayer Advocate Service to determine the nature of the harm or the need for assistance.