TheTaxpayer Advocate Service on Wednesday released its annual report to Congress. Among other things, the report warns that a five-year plan to revamp how the Internal Revenue Service operates may result in a substantial reduction in telephone and face-to-face interactions with taxpayers.
“Based on our internal discussions with IRS officials, TAS has been left with the distinct impression that the IRS’s ultimate goal is to get out of the business of talking with taxpayers,” the report states.
The IRS’ plan is explained and developed in a concept-of-operations document that reflects seven themes:
- Facilitate voluntary compliance by empowering taxpayers with secure, innovative tools and support;
- Understand noncompliant taxpayer behavior and develop approaches to deter and change it;
- Leverage and collaborate with external stakeholders;
- Cultivate a well-equipped, diverse, skilled and flexible workforce;
- Select the highest-value work using data analytics and robust feedback loops;
- Drive more agility, efficiency and effectiveness in IRS operations; and
- Strengthen cyberdefense and prevent identity theft and fraud.
“Nowhere in the ConOps is there a statement that the IRS plans to reduce telephone service or close walk-in sites, even though that is a central component of its strategy,” notes the TAS report.
The IRS “already reduced face-to-face and phone interactions last year, and now they’re going to do it further?” asked Linda Sherry, director ofConsumer Action.
“We have the most amazingly complex tax code, and this is a recipe for disaster,” she told CRM Buyer.
Congress has been cutting IRS funding in recent years. The 2015 budget set funds for the agency at their lowest level since 1998, when accounting for inflation, IRS Commissioner John Koskinen told a Senate committee last year.
Meanwhile, the tax code has become increasingly complex.
IRS budget cuts resulted in a significant decline in staffing and uneven performance, theGovernment Accountability Office warned in 2014, when appropriations fell below fiscal year 2009. About 9,000 IRS employees lost their jobs since 2009, even though the agency’s workload steadily increased.
The IRS now has additional responsibilities under the Affordable Care Act, including tracking who has health insurance, and calculating and imposing penalties on those who don’t.
By computerizing more procedures, the IRS “is hoping that taxpayer interaction with [it] through online accounts will address a high percentage of taxpayer needs,” the TAS report notes.
The agency is planning to enable third parties — such as tax return preparers and tax software companies — to do more to work with taxpayers, which it apparently believes will increase compliance for millions of taxpayers.
However, “many of the online tax prep places make it very difficult for taxpayers, and their services are very basic,” said Consumer Action’s Sherry. “A lot of people in that industry aren’t adequately certified and don’t have the knowledge they need.”
Tax preparers aren’t regulated, observes the TAS report.
Setting Taxpayers Up for Failure?
Millions of taxpayers either don’t have Internet access or don’t want to resolve important financial matters over the Internet, TAS said. Further, many tax issues require considerable back-and-forth discussions and can’t be dealt with online.
“We’re a frontline organization here in Chicago serving about 8 million people and are doing the IRS’s work for it because they’ve reduced customer service so much,” said David Marzahl, CEO of theCenter for Economic Progress.
“The situation is now untenable, and if the IRS would follow its plan, the ripple effect would be enormous,” he told CRM Buyer.
“The idea that the typical low-income taxpayer or someone not college-educated would handle what they need online is farcical and will set people up for failure,” he said.
TAS has called on the IRS to publish the ConOps and hold public discussions on it, and for Congress to hold hearings on the IRS’ plans over the coming months.