If you need tax help this year, don’t count on the IRS bean counters.
Tight budgets and heavier workloads have created a “devastating erosion of taxpayer service” provided by the IRS, the country’s top taxpayer watchdog said recently in her annual address to Congress, one day after the agency’s chief warned of a potential two-day IRS shutdown.
The report card, submitted in advance of the Jan. 20 start of tax season, said that Americans can expect millions of unreturned or unanswered phone calls and longer-than-usual delays when it comes to receiving their refund checks.
“When the IRS does not answer the calls its taxpayers are making to it, and when it does not read and respond to the letters its taxpayers are sending it (in a timely manner), the tax system goes into a downward spiral,” National Taxpayer Advocate Nina Olson said in written remarks. “Taxpayers do not get answers to their questions, so they must either pay for advice they would otherwise obtain for free, or they proceed without any advice at all.”
The math doesn’t add up, Olson said: The IRS is “receiving 11 percent more returns from individuals, 18 percent more returns from business entities, and 70 percent more telephone calls” than it did a decade ago.
Yet the IRS’s budget has been reduced 17 percent (in inflation-adjusted terms) since fiscal year 2010. The biggest drop in agency funding came in fiscal year 2013, following a debt-ceiling showdown between President Barack Obama and congressional Republicans. That showdown led to the Budget Control Act of 2011 and, ultimately, across-the-board budget cuts known as sequestrations.
What has that meant for customer service? The IRS shed nearly 12,000 employees, will conduct 46,000 fewer audits this year than last, and is “unlikely to answer even 50 percent of the (100 million) telephone calls it receives,” according to Olson’s report. Those who get through will be on hold for half an hour on average and longer during peak times; the agency will answer only “basic” questions during filing season; and after the season ends, it won’t answer any tax-law questions at all, which could spell trouble for the 15 million taxpayers who file late.
The report echoed the tone of a dire email that IRS commissioner John Koskinen sent to his employees the day before, warning of a troubling tax season ahead.
“People who file paper tax returns could wait an extra week — or possibly longer — to see their refund,” the email said. “Taxpayers with errors or questions on their returns that require additional manual review will also face delays.”
And agency funding shortfalls will beget revenue declines: Fewer agents to collect taxes and conduct audits could cost the Treasury $2 billion in lost tax revenue.
“There is no way around the severity of these budget cuts without taking some difficult steps,” including a hiring freeze, cuts in overtime pay and delays in installing needed IT upgrades, and despite the cuts, the IRS still “needs to plan for the possibility of a shutdown of IRS operations for two days later this fiscal year,” Koskinen said in his email, under the subject line “Budget update: Tough choices.”
It has been a swift degradation of service for the agency. In fiscal year 2004, employees manning the IRS public hotline answered 87 percent of calls, and hold times averaged 2.5 minutes.
“Regardless of who files the return, whether it’s self-prepared or a paid preparer, the delay is going to exist,” said Tish Heiss, an accountant and owner of the Liberty Tax franchise in Lawrenceville.
But professional tax preparers can call practitioner-only hotlines, unavailable to the general public. That means the people who are likely to bear the brunt of the customer service shortfall are those who forgo — or are unable to pay for — an accountant’s services.