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IRS Shortcomings on Full Display in Latest NTA Findings

Implementation of the Taxpayer First Act, inadequate taxpayer service and limited funding are just some of the key findings in the latest National Taxpayer Advocate (NTA) report about the IRS.

Jan 13th 2020
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What is happening at the IRS
What is happening at the IRS

On January 8, 2020, Acting NTA Bridget Roberts released her 2019 Annual Report to Congress (IR-2020-30, 1/8/20). Although this was Roberts’s foray into this area as the head of the IRS’ watchdog, she harped on some familiar themes from recent years.

Roberts also released the third edition of the NTA’s “Purple Book.”  This publication presents 58 legislative recommendations designed to strengthen taxpayer rights and improve tax administration.

The report notes that that the Taxpayer First Act—enacted into law on July 1, 2019—has made the most comprehensive revisions to IRS procedures in more than two decades. The new law requires the IRS to develop four strategic plans:

1. A comprehensive taxpayer service strategy (due to Congress by July 1, 2020)

2. A comprehensive plan to redesign the IRS' organizational structure (due to Congress by Sept. 30, 2020)

3. A comprehensive employee training strategy that includes taxpayer rights training (due to Congress by July 1, 2020)

4. A multi-year plan to meet IRS information technology (IT) needs

"By passing the Taxpayer First Act, Congress has sent the IRS a clear message that it needs to rethink the way it operates – the services it provides, its organizational structure, the way it trains employees, and the technology it uses," wrote Roberts.

Here are several other key issues covered by the Acting NTA.

  • The IRS received about 100 million telephone calls in fiscal year 2019, but customer service representatives answered just 29 percent of them. As a result, the NTA said Congress must offer funding to the IRS for adequate staffing and a budget that can provide better customer experience. 
  • The IRS estimates that its current multi-year plan to improve its technology infrastructure will cost about $2.3 billion to $2.7 billion. When rolled out fully, the plan will make the tax agency more efficient.
  • The NTA has consistently complained about the IRS’ shrinking budget. Its workforce has been reduced, increasing the workload for employees. This remains a point of contention.
  • The IRS has designed filters to prevent refund fraud, but this slows down legitimate tax refunds. The “false-positive rates” have been as high as 71 percent. 
  • Due to technology, it’s easier for untrained tax return preparers to enter into the business without having knowledge of tax law. While attorneys and CPAs must pass exams and satisfy education requirements, there are currently no licensing requirements for unenrolled tax return preparers.
  • Federal agencies are required to provide a system that allows Americans with limited English proficiency to access services. Nevertheless, the IRS only translates some important notices into Spanish and none into languages other than English or Spanish. 
  • The IRS used a combination letter, which includes an initial contact letter and a 30-day notice, in 16 percent of its audits during the 2015-2019 fiscal years. The NTA says that’s not enough time for filers to provide documentation and resolve questions.

Finally, Roberts noted that long-time NTA Nina E. Olson retired five months ago, but a permanent replacement has not yet been appointed. "While I am honored to serve as the Acting National Taxpayer Advocate," Roberts wrote, "the Office of the Taxpayer Advocate – and taxpayers – deserve a permanent appointee. . . . Given the current crossroads at which the IRS finds itself, it is critical that a permanent National Taxpayer Advocate be appointed as quickly as possible to help ensure the IRS protects taxpayer rights and meets its obligations to taxpayers.”

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