AIA’s latest Abuse of the Week highlights a shocking report from the National Taxpayer Advocate, which introduces what it considers to be the “most serious problems encountered by taxpayers.” Of the various problems identified as detrimental to the agency’s ability to function, AIA views the IRS’s current administration of civil penalties as a cause for grave concern.

The report directly states that the IRS exercises excessive authority and exhibits unprecedented overreach. During FY 2023, the agency assessed almost 46 million civil penalties totaling almost $66 billion against taxpayers, and the manner in which the IRS issues civil penalties is “often unfair.” Sometimes, penalties incurred are “life-changing and even insurmountable for some taxpayers.”

Cases such as erroneous penalties for underpaid estimated taxes and minor misreporting errors by uncredentialed preparers have imposed significant, stress-inducing financial hardships on the individuals involved.

In many cases like these, taxpayers lack adequate context for the specific infraction and have no avenue for defense, which causes harm and additional strain on resources for both the IRS and the taxpayer.

The report also states that the administration of penalties should be a tool for tax compliance. The result of abusive administration of penalties has actively encouraged noncompliance and “erode[d] [taxpayer] confidence in the U.S. tax system.”

The IRS has morphed into an agency fueled by penalty assessment, and along the way, has become more brazen in its harassment of hardworking American taxpayers. AIA is committed to ridding the IRS of this corrosive culture and aims to establish a formal system for due process, so that taxpayers who are unfairly targeted with penalties can defend themselves.

If you, or someone you know, has experienced specific IRS abuse and wish to flag the instance for potential inclusion in future Abuses of the Week, contact us with the details at the following email: info@irsaccountability.org.

Read the full report here.