In this Tax Chat! we will discuss how administrative burdens, especially excessive administrative burdens, can deter taxpayers from benefitting from tax provisions and taxpayer protections.  Building on the work of public administration scholars Pamela Herd and Don Moynihan, who define administrative burden as the learning, compliance, and psychological costs citizens experience when they interact with government, we discuss the concept of administrative burdens and reveal specific examples of how IRS actions, and inaction, have burdened taxpayers and jeopardized taxpayer rights.  In addition to identifying and contextualizing these problems we propose that the IRS, working with internal and external partners, conduct and report on internal audits to evaluate when it would be appropriate to reduce, eliminate, or shift burdens away from citizens and onto the government or third parties.

As part of this inquiry, a key question is when do burdens become excessive and trigger additional governmental efforts to reduce, eliminate, outsource or justify the burden? Our position is they become excessive when two conditions are satisfied; first, when the burdens fall primarily on a subset of taxpayers who are low income or underrepresented, or taxpayers who identify as members of racial or ethnic minority groups, and second, when the burdens will directly impair taxpayer rights.  As to the first condition, we consider low-income taxpayers as part of a protected group because characteristics (such as limited literacy) will minimize the likelihood that the taxpayers themselves will be able to overcome barriers on their own. We also consider underrepresented taxpayers as worthy of additional procedural protections. While there will be considerable overlap between the two categories, if the amount of potential tax, penalty or interest does not justify the cost of paying for the assistance of representatives then an individual who could afford representation would rationally choose to not incur those fees. That person would be less likely to attain an outcome that would be achieved in the absence of the burdens. 

In addition, there is a growing recognition that agency interposition of burdens in a way that is ostensibly race neutral may contribute to exacerbating racial inequities. Burdens that fall disproportionately on racial or ethnic minorities contribute to perpetuating racial inequity and is worthy of additional agency attention. 

We’re looking forward to sharing our work with the Tax Chat! Community, so please join us on April 13 at noon EDT/17:00 BST/18:00 CEST.

Hope to see you on the Tax Chat!

All the best,
Nina

Nina E. Olson
Executive Director
Center for Taxpayer Rights