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Taxpayer advocate: Let's try 'I'm sorry'

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KAI RYSSDAL: You should be getting your W-2 from your employer in the mail soon. Feel free to stick it in that desk drawer until April the 13th or so. But just know the Internal Revenue Service is on your side. To a certain degree. The National Taxpayer Advocate issued her annual report to Congress today. She's the taxpayer's representative within the IRS. And she wants the bureaucracy to change its ways. For instance, to apologize when it's wrong. And maybe offer a little something to compensate your for your troubles. Our Washington Bureau Chief John Dimsdale has more.


JOHN DIMSDALE: On a tour of foreign tax agencies, Nina Olson, the National Taxpayer Advocate, discovered the British tax office is willing to pay for its mistakes.

NINA OLSON: When they essentially screwed things up for taxpayers to the point that they were causing taxpayers hardship, the agency would admit that they had done something wrong and make a symbolic payment. It wasn't meant to compensate the taxpayer for all their time and anguish, but it was a symbolic payment saying "We're sorry."

Olson recommends the IRS adopt similar apology payments ranging from $100 to $1,000 -- tax-free, of course. Olson also thinks it's time for the IRS to require better disclosure of the growing cash economy. Transactions like buying and selling over the Internet and paying for cleaning and other household services. She says that could net the government an extra $100 billion every year.

Kevin McCormally of Kiplinger's Personal Finance magazine says that revenue could reduce the hit on honest taxpayers.

KEVIN MCCORMALLY: If eBay was required by law to report to the IRS each year the total proceeds that you sold on eBay, suddenly you might be more likely to report all of your sales on eBay. As soon as the IRS has information, two things happen: One, taxpayers suddenly become much more honest; and two, if they don't, the IRS has got something to ask them about.

The IRS had no immediate reaction to the Taxpayer Advocate's report.

In Washington, I'm John Dimsdale for Marketplace.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

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