AUGUSTA, Maine — Maine Revenue Services has a single position identified as the taxpayer advocate, but members of the Legislature’s Taxation Committee say that person does not have the independence necessary to truly advocate for taxpayers.
“That position reports to the state tax assessor,” said Sen. Joe Perry, D-Bangor, co-chairman of the Taxation Committee. “There is no independence like the advocate at the IRS.”
He said the advocate at the federal Internal Revenue Service is required by law to be independent of IRS management, to report directly to Congress about any problems that are uncovered and to recommend changes. He said the state taxpayer advocate simply reviews a complaint to make sure Maine Revenue Services followed its own rules in the case.
“We get a lot of complaints from taxpayers that don’t feel they have been treated right,” Perry said. He said lawmakers often have to act as advocates and contact revenue services on behalf of constituents who have not been able to work with the agency.
“I can tell you about case after case where it certainly appears to me that revenue services was not being reasonable,” he said.
Perry said an owner of a small business in his district approached him after Maine Revenue Services refused to give the company a payment plan to pay a tax assessment, with interest, over a period of time instead of immediately paying the full amount. He said the company also was threatened with having funds seized from its bank accounts.
He said the company had a “good track record” in business but was having problems during the recession, and if it had paid what revenue services demanded, the business likely would have closed.
“If you’re looking at putting people out of work to get taxes due right now, I don’t think that is what we should be doing,” Perry said.
Sen. Richard Nass, R-Acton, said members of both parties have long had constituents come to lawmakers for help in dealing with Maine Revenue Services. He agreed with Perry that it might be time for lawmakers to consider the sort of independent advocate that the IRS and some other states have established.
“That independent advocate needs to be able to get involved in Maine Revenue Services decisions before they become effective,” Nass said. “That is essentially what [Sen.] Joe [Perry] is concerned with, and I share that concern.”
Nass said he understands the concerns from revenue services that lawmakers want it both ways. The office pushes to make sure that owed taxes are collected, but people also do not want the agency to push too hard to collect that money. But, he said, the agency has caused itself a lot of problems with the use of heavy-handed collection tactics.
“There is always two or three groups that are being beat up by Maine Revenue Services,” he said.
Commissioner Ryan Low, who oversees Maine Revenue Services as part of the Department of Finance, said there is no way to enforce tax laws without upsetting some taxpayers, and that the agency has a good process in place to handle complaints.
“We feel the system we have in place is working, “Low said. “We think the taxpayers have multiple avenues to pursue issues that they have. They do have the taxpayer advocate.”
He acknowledged that the state advocate does not have the independence of the federal advocate, and added the federal model is more expensive than the state system. He argued that in a small state, there is no need for such a bureaucracy and that taxpayers know there are many avenues to seek help.
“I get calls, the governor’s office gets calls, and lawmakers get calls,” Low said. “People know if they are being mistreated. There are ways to get help, and they do.”
He said if the state were just designing a tax collection system from scratch, it likely would do many things differently. He said the administration is open to any suggestions to improve the system, including changes in the taxpayer advocate position.
“Our concerns would be is it more effective and what does it cost,” he said.
Both Perry and Nass say the committee will discuss the issue as they deal with several tax matters in the January session.