IRS to Provide Worst Service Since 2001, Tax Advocate Says

IRS Now Answering Less Than Half of Taxpayers’ Phone Calls

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IRS Providing Worst Taxpayer Service Since 2001, Taxpayer Advocate Tells Congress. David McNew/Getty Images

The IRS will be able to answer less than half of the phone calls it gets from tax help-seeking taxpayers this tax season, according to the U.S. Taxpayer Advocate Service.

Also See: IRS Response to Audited Taxpayers Just too Slow: GAO

In her 2014 annual report to Congress, National Taxpayer Advocate Nina E. Olson warned lawmakers that taxpayers are likely to receive the worst levels of taxpayer service this tax season since at least 2001 when the IRS implemented its current performance standards.

Olsen recommended that Congress pass a Taxpayer Bill of Rights, adopt additional safeguards to make those rights meaningful, and provide sufficient funding needed by the IRS to make the “Right to Quality Service” a reality.

While the IRS adopted a Taxpayer Bill of Rights, which does include “The Right to Quality Service,” in 2014, Olsen says actual legislation is needed to make its provisions enforceable.

The IRS is Falling Down

According to Olson, the IRS achieved its highest level of taxpayer service in 2004, answering 87% of calls from taxpayers with average on-hold times of only 2.5 minutes. In addition, noted Olson, the IRS in 2004 “also responded to a wide range of tax-law questions, both on its toll-free lines and in its roughly 400 walk-in sites, prepared nearly 500,000 tax returns for taxpayers who requested help -- particularly low income, elderly, and disabled taxpayers, and maintained a robust outreach and education program that touched an estimated 72 million taxpayers.”

Since then, service to taxpayers has grown progressively worse. According to Olson’s report, the IRS’ taxpayer service expectations for this tax season are:

  • The IRS is unlikely to answer even half the telephone calls it receives, and levels of service may average as low as 43%.
     
  • Taxpayers who manage to get through are expected to wait on hold for 30 minutes on average and considerably longer at peak times.
     
  • The IRS will answer far fewer tax-law questions than in past years.  During the upcoming filing season, it will not answer any tax-law questions except “basic” ones.  After the filing season, it will not answer any tax-law questions at all, leaving the roughly 15 million taxpayers who file later in the year unable to get answers to their questions by calling or visiting IRS offices.
     
  • Tax return preparation assistance from the IRS has been eliminated.

Why?

The problem, says Olson, is a combination of the IRS’ growing workload, and loss of public trust resulting from the IRS targeting of conservative groups applying for tax-exempt status. The two factors resulted in what Olson calls a “perfect storm” of trouble for both the IRS and taxpayers. “Taxpayers who need help are not getting it, and tax compliance is likely to suffer over the longer term if these problems are not quickly and decisively addressed,” Olson wrote.

“IRS Workload?” you ask. Just like the number of pages in the tax law, it has increased. The IRS now gets 11% more tax returns from individuals than it did 10 years ago, 18% more returns from businesses, and 70% more phone calls. Especially adding to the IRS’ workload this year, notes Olson, will be first-time implementation of the Patient Protection and Affordable Care Act – Obamacare – and the Foreign Account Tax Compliance Act.

And as its workload swells, the IRS’ budget and staff shrink. According to Olson’s report, the IRS’ budget has been cut by 17% just since 2010. As a result, the IRS has chosen to cut almost 12,000 employees, with more cuts planned during 2015. In addition, the IRS has been spending 83% less on employee training since 2010.

The shrinking, more poorly trained workforce leaves the IRS ever-less effective, stated Olson.

“Like any agency, the IRS can operate more effectively and efficiently in certain areas,” Olson wrote.  “However, we do not see any substitute for sufficient personnel if high-quality taxpayer service is to be provided.”

For example, reducing the national tax gap by preventing payments of fraudulent refund claims is one of the IRS’ main services to honest taxpayers. But it’s not much of a service when the IRS is paying out $70 million a year in tax refunds fraudulently claimed by prison inmates.

Also See: IRS Wrongly Paying Millions in Tax Refunds to Prisoners

“The only way the IRS can assist the tens of millions of taxpayers seeking to speak with an IRS employee is to have enough employees to answer their calls,” Olson concluded. “The only way the IRS can timely process millions of taxpayer letters is to have enough employees to read the letters and act on them.  And the only way the IRS can meet the needs of the millions of taxpayers who visit its walk-in sites is to have enough employees to staff them.”