The other day, I sat on hold with the Internal Revenue Service for more than three hours. I took to Twitter to complain, and my fellow tax professionals had little sympathy: Long phone waits remain the rule, not the exception.
It’s not surprising that improving customer experience remains one of the most serious management and performance challenges confronting the IRS, according to a recent report from the Treasury Inspector General for Tax Administration.
TIGTA is required by law each year to prepare a report summarizing the most significant challenges facing the IRS. As part of the Reports Consolidation Act of 2000 (now Public Law 106-531), TIGTA is also required to assess the IRS’ progress in addressing those challenges.
According to TIGTA, the IRS’s top management and performance challenges, in order of priority, for fiscal year 2020 (which began on Oct. 1 and will end on Sept. 30, 2020) are:
1. Security Over Taxpayer Data and Protection of IRS Resources
2. Implementing Tax Law Changes
3. Addressing Emerging Threats to Tax Administration
4. Supporting an Enhanced Taxpayer Experience
5. Modernizing IRS Operations
6. Improving Tax Reporting and Payment Compliance
7. Reducing Fraudulent Claims and Improper Payments
8. Impact of Global Economies
9. Protecting Taxpayer Rights and
10. Achieving Operational Efficiencies
If the list looks familiar, you’ve got a good memory. The challenges are very similar to those reported last year. A key reason for many of the issues also remains the same: funding.
While the IRS budget has increased slightly for the most recent year—from $11.2 billion to $11.4 billion—the dollars allotted to the agency remain lower than they were in fiscal year 2008. That has resulted in, among other things, a significant reduction in the number of full-time employees.
In 2018, for example, the IRS used 73,519 full-time equivalent positions, a decrease of 15.5% since 2013.
‘Serious Underlying Issue’
The trend toward fewer employees available to answer questions—in person and over the phone—directly impacts the quality of taxpayer services. TIGTA emphasized that human capital is still “a serious underlying issue that impacts all 10 of the Major Management Challenges.”
Unfortunately, TIGTA expects that the staffing issues will continue. That’s problematic, because the agency is tasked with overseeing more laws in the coming years, not fewer.
At the top of the list: administering the provisions of the Tax Cuts and Jobs Act. According to TIGTA, to ensure taxpayer readiness for the TCJA, the IRS had to create 48 new tax products, revise 494 existing tax products, and perform computer programming changes affecting 128 information technology systems.
Those numbers don’t include additional outreach to notify taxpayers about TCJA-related changes, and hiring and training employees to address taxpayer questions.
The IRS must also continue to educate taxpayers and encourage compliance under existing tax laws, such as the Protecting Americans from Tax Hikes Act of 2015 (PATH Act).
For example, the IRS must wait until mid-February to issue refunds to millions of taxpayers who claim the earned-income tax credit (EITC) or the additional child tax credit (ACTC), a move that has initially resulted in taxpayer confusion.
The IRS also is currently working to educate taxpayers to renew Individual Taxpayer Identification Numbers (ITINs) since, under the PATH Act, ITINs that haven’t been used on a federal tax return at least once in the last three years will expire. And not all taxpayers understand that if they claim the American Opportunity Tax Credit (AOTC), they must also provide the Employer Identification Number (EIN) of the educational institution. Last year, TIGTA identified approximately 234,000 tax returns claiming $209 million in refundable AOTCs that didn’t include the required EINs.
To continue to meet these challenges on a limited budget, the IRS is turning to technology-based services such as the “Where’s My Refund?” tool and utilizing external partners for taxpayer services. According to the IRS, this means that it can focus personal resources on phone and taxpayer assistance centers. But that’s still a challenge.
Pushback on Claims
Remember my phone complaints?
The IRS claims that the relative success rate of taxpayers who call the IRS toll-free number seeking assistance from a customer service representative was nearly 80% in 2018, representing more than 10 million answered calls and 17 million calls handled through automated systems.
However, TIGTA says that the IRS’ telephone metrics don’t reflect overall call demand or performance for IRS telephone assistance, nor do they account for the cost of providing telephone service, the time it takes taxpayers to talk to a representative, or the level of resources the IRS is able to devote to telephone service.
Last year, TIGTA reached a similar conclusion, chiding the IRS for not making “sufficient progress to offer taxpayers the same telephone service that they receive from other organizations.” One example? Despite lengthy waits and unanswered calls during busy periods, the IRS doesn’t offer taxpayers a callback service.
What does this mean for taxpayers?
TIGTA reports that the decline in staffing has affected the IRS’s ability to deliver its priority program areas, including customer service and enforcement activities.
During the 2018 filing season, the IRS received about 137 million individual tax returns, collected more than $3 trillion in revenue, and issued more than 95 million refunds, all while addressing taxpayer questions, protecting taxpayer records, and working to strengthen tax compliance. But TIGTA has made it clear that there’s still work to be done to promote economy, efficiency, and effectiveness in the administration of the nation’s tax laws.
You can read the TIGTA report, Management and Performance Challenges Facing the Internal Revenue Service for Fiscal Year 2020 here.
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