It may have been lost in the shuffle of the efforts to avoid another government shutdown, but on February 12, National Taxpayer Advocate (NTA) Nina E. Olson delivered her annual report to Congress on the state of the IRS.
The outlook isn’t exactly rosy. According to Olson, the agency is “stretched to the breaking point” by recent events and a tight budget.
This was already going to be a challenging tax filing season at the IRS before the government closed for business for five weeks. Most of the provisions affecting individual taxpayers in the Tax Cuts and Jobs act (TCJA), the massive tax legislation enacted at the end of 2017, take effect in 2018 and last through 2025. The changes include lower individual tax rates, the loss of personal exemptions, an increased standard deduction and rollbacks of certain deductions. Both taxpayers and tax practitioners alike may be perplexed by the new rules.
In the preface to the report, the NTA, which serves the public as the IRS’ watchdog, discussed the impact of the shutdown, pointing out how the agency was left hamstrung just before the opening of tax filing season.
Notably, in the week before the shutdown, the IRS was able to answer 75 percent of telephone calls routed for assistance, with an average wait time of 13 minutes. During the first week of the shutdown, only 37 percent of the routed calls—about half from the prior week—were answered. The average wait time was more than a half hour.
During the first week of tax filing season, about 93 percent of taxpayers reportedly called to make payment arrangements but were unable to speak to a live representative. Those who were able to get through waited, on average, an astounding 81 minutes!
Also, snail mail started to pile up while the IRS was working with a short staff. As of January 24, the agency had more than five million pieces of mail waiting to be reviewed, including 87,000 amended returns that must be processed manually. "These numbers translate into real harm to real taxpayers,” wrote Olson.
As part of the mandated annual report, Olson is tasked with making at least 20 recommendations to improve IRS operations. The top priority, as she cited, is to provide funding to enable the agency to replace its antiquated core technology. She referenced a systems crash in 2018 that required the IRS to extend the tax filing deadline for a day. If it happens again, cautions Olson, the results could be more catastrophic.
Among the other problems mentioned in the report, the NTA addressed the need for taxpayer questions to be answered year round, especially those relating to the TCJA, as well as broadening the scope of what constitutes an allowable question. Some of the other “serious” problems involve private debt collections and taxpayers with economic hardships.
Finally, the report includes the long-awaited “Purple Book" for 2019. This section covers 58 legislative recommendations intended to strengthen taxpayer rights and improve tax administration. It can be found here.
Ken Berry, Esq., is a nationally known writer and editor specializing in tax, financial, and legal matters. During his long career, he has served as managing editor of a publisher of content-based marketing tools and vice president of an online continuing education company. As a freelance writer, Ken has authored thousands of articles for a...