Continually increasing IRS user fees could be deterring taxpayers from seeking pre-filing tax guidance, according to a new report that National Taxpayers Union Foundation released Thursday.
Taxpayers often seek clarity from the Internal Revenue Service (IRS) on complex tax matters. A Private Letter Ruling (PLR) is a written statement issued by the IRS that interprets and applies tax laws to a taxpayer’s specific situation.
PLRs provide legally-binding assurance from the IRS for the taxpayer who requested the ruling, enhancing compliance and minimizing potential disputes. Over the past decade, the IRS has doubled the fees for requesting a PLR, which could be deterring taxpayers from seeking pre-filing tax guidance.
NTUF’s analysis of IRS data shows that, as these fees have risen, fewer requests for rulings are being filed, which suggests that higher costs are discouraging taxpayers from seeking the certainty that these rulings provide.
“Raising fees for PLRs could . . . burden both taxpayers and the IRS with unnecessary administrative and legal challenges. Reducing these fees could help prevent drawn-out court cases, saving time and resources for taxpayers as well as the IRS,” according to the report, written by NTUF Vice President of Research Demian Brady and Associate Policy Analyst Yasmeen Kallash-Kyler.
Read the report.