Here’s Why Getting Tax Help Could Get Worse for Americans
You know you’re in trouble when you have an urgent issue and all you hear is: “Your call is very important to us. Please hold. A representative will be with you shortly.” Unfortunately, these words could become more common for taxpayers trying to receive specific help from the IRS.
Uncle Sam’s money collector is unlikely to improve its face-to-face customer service anytime soon. In fact, finding a human at the IRS to answer your personal tax questions could prove more difficult in coming years. The IRS has developed a comprehensive “Future State” plan that aims to transform the way it interacts with taxpayers by scaling back phone and in-person help, in favor of more online self-help features. Thanks to the involvement of management consultants, this plan has cost several millions of dollars. However, the IRS hasn’t revealed details to the public yet.
National Taxpayer Advocate Nina Olson, head of an independent organization within the IRS called The Taxpayer Advocate Service (TAS), sees at least two significant problems with the plan. “First, implicit in the plan – and explicit in internal discussions – is an intention on the part of the IRS to substantially reduce telephone and face-to-face service,” she explains in her recent report to Congress. “Second, to the extent taxpayers require help, the IRS is developing procedures to enable third parties like tax return preparers and tax software companies to provide it – an approach that will increase taxpayer compliance costs.”
While Olson notes online taxpayer accounts could help reduce demand for telephone and face-to-face interaction to some degree, they shouldn’t be seen as a cure all. More than 100 million taxpayer calls and five million taxpayer visits flood IRS offices every year. Past technology improvements have also failed to simplify matters. Over the last decade, the IRS has increased the individual tax return e-filing rate from 54% to 85%, enhanced the Where’s My Refund? tool, and added substantial content to IRS.gov. Yet the number of taxpayer calls to its customer service lines has increased 59% from 64 million to 102 million.
Why the sudden change of heart? Money. In 1998, Congress directed the IRS to place a greater emphasis on serving taxpayers’ needs. Congress also recently provided the organization with an additional $290 million in funding for taxpayer assistance. Nonetheless, years of budget cuts and the perpetual complicated tax code weighs on the system. According to the Center on Budget and Policy Priorities, the IRS budget has been cut 18% from 2010 to 2015. The number of IRS employees declined by over 13,000 during the same period.
Someone has to pay, and you already know who. In 2015, half of taxpayers’ calls to the IRS went answered. Lucky taxpayers able to get through had an average wait time of 23 minutes. If phone operations are scaled back further, taxpayers will have to rely on other forms of help, such as professional tax preparers who charge fees. The average cost of a professional income tax preparer is already near $300, including an itemized Form 1040 with Schedule A and a state tax return. The IRS may raise its fees on certain services as well in order to fill budget gaps.
Olson reiterates that the IRS should make its plan public and seek comments from taxpayers, practitioners, and others. She also urges Congress to hold hearings during the next few months to discuss the future of IRS operations. Though, only two things seem to be certain these days: taxes and the death of personal customer service.