Think reaching a human at the Internal Revenue Service last tax filing season was tough? National Taxpayer Advocate Nina Olson anticipates even less telephone and face-to-face customer service in future years.
A planned expansion of IRS online offerings will leave taxpayers who seek help the old-fashioned way “up a creek,” Olson says, listing it as the No. 1 problem in a report to Congress released Wednesday.
The analysis by the Taxpayer Advocate Service, an independent office within the IRS, must include at least 20 of the “most serious problems” taxpayers face when dealing with the agency. The main focus this year: what it says is an emphasis on enforcement over customer service in the IRS’s long-term strategic plan, and how it could force many to pay tax preparers for advice they used to get for free.
Olson's warning comes as Congress, after an abysmal 2015 tax season, gave the cash-starved agency an additional $290 million at the end of the budgeting process. The money is “targeted solely for taxpayer services to ensure the agency responds to taxpayer questions in a timely manner, and to improve fraud detection and prevention and cybersecurity,” according to a summary of the bill from the House Appropriations Committee.
Responding to the Taxpayer Advocate's report, the IRS says it "does not paint a full picture" of evolving, long-term planning. "The Advocate seems to want the IRS to do business the way we did 10 years ago," the agency wrote in a statement to Bloomberg. The IRS "believes increasing the availability of self-service interaction frees up in-person resources for taxpayers who truly need them.''
Here are some of the other major problems the Taxpayer Advocate identified in its report:
Lack of transparency
Since 2014 the IRS has spent “several million dollars” working with management consultants to develop a plan for how it will operate over the next five years. The details in the report haven't been made public or shared with Congress, and the IRS hasn’t solicited comments from a broad pool of constituents, the advocate's report notes.
Additionally, the IRS has never asserted so many times that data and documents the Taxpayer Advocate planned to include were for “official use only” and couldn’t be made public. That made this year’s report difficult to write, Olson says, “because while the intent to reduce telephone and face-to-face service has been a central assumption in the five-year ‘Future State’ planning process, little about service reductions has been committed to writing.”
Olson is calling for congressional hearings on the IRS plan over the next few months, and will solicit comments at public hearings held across the country. Among groups she plans to invite are those with the greatest need for free help, including the elderly, the disabled, small businesses, low-income taxpayers, and people with limited English proficiency.
Unrealistic expectations for online efforts
The impression the Taxpayer Advocate’s office has, based on discussions with IRS officials, is that the agency’s ultimate goal is “to get out of the business of talking with taxpayers.” It would do that in part by creating online accounts for filers, which Olson sees as a good way to supplement, not replace, existing service—as long as data security concerns are addressed.
While far more people file electronically now, and the IRS has taken many steps to limit the need for taxpayers to phone the IRS, the demand for personal service hasn't decreased. In fact, over the past decade the number of calls the IRS received on its Accounts Management lines rose from about 64 million for fiscal year 2006 to about 102 million for fiscal year 2015. That’s almost a 60 percent jump, as shown in a chart from the report:
Automating customer service even more, the report says, “will mean only those with the means to pay for it can receive help with their taxes.”
Delayed refunds due to antifraud filters
Some of the filters used by the IRS, while increasingly necessary to identify tax fraud, have a high false positive rate. That causes refund delays for hundreds of thousands of legitimate taxpayers. The filter that halts returns potentially tied to identify theft, for example, had a 36 percent rate of false positives last year, according to the report.
Compounding the hassle for taxpayers caught up in the filter's web was that they were asked to verify their identification over the phone or online. But for three straight weeks during last year’s filing season, fewer than 10 percent of taxpayer calls about those flagged returns were answered.