Taxpayer Assistance Orders (TAO) are designed for those who would experience substantial financial hardship by complying with their federal tax obligations. They are most useful for situations where an IRS Operating Division or Function does not agree with the Taxpayer Advocate Service (TAS) with respect to initiating, ceasing, or refraining from taking a particular action, but also where a financially burdened taxpayer seeks to have his or her case reviewed at a higher level.
IRC 7811 authorizes the National Taxpayer Advocate (NTA) to issue a TAO, as well as Area Directors (ADs), Local Taxpayer Advocates (LTAs), the Executive Director, Case Advocacy (EDCA), and the Deputy National Taxpayer Advocate (DNTA). Id.
Typically, a TAO will only be considered only when all of these four factors are present:
- the taxpayer is suffering or about to suffer a “significant hardship” if relief is not granted; and
- the significant hardship results from the manner in which the IRS is administering the law, and
- TAS does not have the authority to take the actions needed to grant relief to the taxpayer or to resolve a case issue, and
- the Operating Division or Function (OD/Function) does not agree with TAS on the proper resolution of specific case issues, or the IRS fails to perform the actions recommended by TAS.
A significant hardship can be an immediate threat of adverse action, a delay of more than 30 days in resolving taxpayer account problems, the incurring by the taxpayer of significant costs (including fees for professional representation) if the taxpayer is not granted relief, or irreparable injury to, or a long-term adverse impact on, the taxpayer if the taxpayer is not granted relief, or a serious privation caused or about to be caused to the taxpayer as a result of the particular manner in which the revenue laws are being administered by the IRS per Treas. Reg. § 301.7811-1(a)(4)(ii). Id. Note that a “privation” is more than a mere economic or personal inconvenience.
Probably the most concrete example of the effectiveness of a TAO would be in a situation where the IRS has levied on an account or garnished the wage of an individual that cannot survive without some or all of their wage. In such cases, these persons may need to seek a TAO in order to obtain relief. TAO’s instruct the IRS to take a certain action in a specific period of time, for example, to release a levy within 30 days.