What Is the Purple Book?
The Purple Book is presented as part of an annual report to Congress by the National Taxpayer Advocate, who is part of the Taxpayer Advocate Service. The book contains a list of legislative recommendations on how to improve taxpayer services in the U.S. The color purple represents the bipartisan nature of the recommendations, as red and blue together make purple.
- The Purple Book contains legislative recommendations to improve taxpayer services.
- The National Taxpayer Advocate presents the Purple Book as part of an annual report to Congress.
- Currently, the IRS does not have sufficient funding to meet taxpayer needs.
How the Purple Book Works
The National Taxpayer Advocate is required by law to present an annual summary of taxpayer issues and key areas in need of policy changes to Congress. The report must include a summary of the 10 most important legislative proposals. Annual reports also typically include:
- Highlights of Taxpayer Advocate Service success
- A supplemental review of the previous filing season
- A report discussing how the Taxpayer Advocate Service fulfills its mission
- Research and related studies
- The Purple Book
Since 2017 the National Taxpayer Advocate has presented a Purple Book to Congress each year as part of the annual report. Each book is a compilation of “noncontroversial, common-sense reforms” that typically receive bipartisan support. According to the Office of the Taxpayer Advocate, 46 of the proposals have become law. More than 20 of these recommendations were included in the Taxpayer First Act of 2019.
The list of recommendations is presented in a user-friendly way, with the recommendations separated into categories. For each recommendation, the Purple Book includes a summary of the present law, the reasons for the proposed changes, and a legislative proposal. The appendix includes reference material for each recommendation featured in the book. This includes bills consistent with the proposals that have been approved by the full House or Senate.
The number of tax reform proposals in the Purple Book that have become law since 2017
History of the Purple Book
During the two years preceding the inaugural Purple Book, Congress had shown interest in Internal Revenue Service (IRS) reform. The idea behind the book was to provide tax-writing committees with a summary of important legislative proposals.
The first Purple Book was introduced in 2017, and it presented these proposals in a clear and concise manner. It included brand-new proposals, as well as previously introduced legislation dating back to 2003 and was created by Nina Olson, the National Taxpayer Advocate from March 2001 until July 2019. She was replaced by Erin Collins in 2020.
One of the most important initiatives was to request that Congress codify the Taxpayer Bill of Rights as Section 1 of the Internal Revenue Code. The National Taxpayer Service believes that taxpayers serve as the foundation of the U.S. tax system, as the system relies on taxpayers to willingly report income. However, there were concerns about the IRS being unresponsive to taxpayers.
The IRS added the Taxpayer Bill of Rights to the Internal Revenue Code in 2014. All of these rights had already existed in the tax code, but the new format was an easy-to-digest list.
The legislative recommendations in the Purple Book focus on strengthening taxpayers’ rights and improving tax administration. The most recent volume, the 2021 Purple Book, published on Dec. 31, 2020, contains proposals that would increase funding for the IRS. Insufficient funding is an ongoing issue that has caused additional problems for taxpayers during the COVID-19 pandemic.
One of the biggest problems the IRS is facing is a lack of resources needed to meet taxpayer needs. According to the annual report to Congress, IRS funding has declined by 20% over the last decade. This lack of funding is the main reason behind many of the most serious issues, which include:
- An aging and inexperienced IRS workforce
- Inadequate IRS customer service
- Obsolete technology
- Limited functionality of online taxpayer accounts
The annual report to Congress also highlights numerous problems taxpayers faced in 2020 due to the COVID-19 pandemic. Lockdown measures and social distancing made it difficult for the IRS to handle any requests that were not automated.
The 2021 Purple Book includes a proposal to revamp the IRS budget structure in order to provide sufficient funding to improve the taxpayer experience. The additional funding would also be used to improve and modernize technology services.