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Tax day: 1040 reasons you should know Nina Olson

Nina Olson is the National Taxpayer Advocate – the voice of the public at the IRS. She's trying to help you navigate the tax code you love to loathe.

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By many accounts, Olson has parlayed her independent role into a powerful position. Charles Rossotti, the IRS commissioner who was instrumental in hiring her as the NTA in January 2001, says she has expanded the influence of the office by being effective and "well respected."

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In some ways, Olson's job involves playing both defense (helping individuals with tax problems) and offense (pushing for changes that will help avoid taxpayer problems in the future).

Here's Olson on offense. Back in 2004, her staff began receiving a surge in complaints from taxpayers who believed they deserved income-tax refunds and felt stonewalled by the IRS. It turned out that IRS computers had flagged many of the refunds as potentially criminal. While the agency was investigating, it refused to communicate with the taxpayers, Olson recalls.

She had two big concerns. First, the evidence from cases that arrived on her desk suggested that a large percentage of the tax filers were honest people who deserved the refunds. Second, Olson worried that the no-communication approach was violating basic due-process rights.

"I started talking to everybody about it," including the commissioner, she says. "Nobody wanted to admit that this criminal investigation was flagging the wrong returns."

By late 2005, she felt her only alternative was to raise her concerns publicly. She issued a strongly worded 42-page addendum to her annual report to Congress. Within a month, Congress and the news media focused on the issues, and the IRS began to respond. In the next year's annual report, Olson could report significant improvement.

The incident stood out not only because it underscored the role that an independent NTA could play: Olson says it was also a moment of clarity for her, as she wrestled with concerns that her job would be at risk if she spoke up sharply and lost a visible battle.

"I thought, OK, I can do this," she says. "If being afraid of losing my job is going to chill my voice, then I shouldn't be in this job."

Olson has used that voice to champion a range of causes. She has called, for years and in vain, for Congress to repeal the Alternative Minimum Tax, which operates as a parallel income tax that often snares Americans by surprise. The original aim was to ensure that the rich pay a minimum amount of tax, but it has piled paperwork on many tax filers who aren't wealthy.

She has fought successfully for the IRS to impose competency tests on tax pre-parers and to reduce the incidence of fraud or incompetence that can land taxpayers in trouble. A 2011 law also imposes new penalties on preparers for mistakes.

Sometimes the issues she pursues affect relatively few taxpayers. In one of the weirdest NTA cases, she once stood up for parents who have a child who was born on the first day of January, aides say. Someone at the IRS, citing a feature of British Common Law, had determined that children "attained" their next age on the day before their birthday, thus bumping certain Jan. 1 babies off of "dependent child" status one calendar year before their parents expected.

"About six months after the problem surfaced, an assistant Treasury secretary was essentially rolling her eyes as she affirmed that your age is what you think it is," says Kenneth Drexler, one of Olson's senior assistants.

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Olson pursues her mission from an office on the third floor of the mammoth IRS headquarters in downtown Washington, looking inward onto a courtyard. The IRS commissioner is just down the hall, albeit one long enough to host a lawn bowling tournament.

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