The 2015 Tax Season Is Going to Suck, According to the Taxpayer Advocateby
The annual report delivered by National Taxpayer Advocate (NTA) Nina E. Olson to Congress on January 14, 2015, packed a somber message: Essentially, taxpayers can expect the worst level of service this tax filing season since around the turn of the century. The NTA, which functions independently within the IRS, attributed this dire warning mainly to budget cuts and related factors. In addition, Olsen recommended that Congress codify a principles-based Taxpayer Bill of Rights and addressed a slew of other key tax issues (IR-2015-02, 1/14/15).
In the preface to the report, Olson emphasized the following four points:
- The budget environment of the last five years has adversely affected taxpayer service, harming taxpayers individually and collectively.
- A lack of effective administrative and congressional oversight, in conjunction with the failure to pass taxpayer rights legislation, has eroded taxpayer protections enacted years ago.
- The combined effect of these trends is reshaping U.S. tax administration in ways that are not conducive to future tax compliance or to fostering public trust in the fairness of the tax system.
- This “downward slide” can be halted if Congress makes an investment in the IRS and holds it accountable.
The report says the combination of the IRS’ additional workload, erosion of public trust relating to the “Tea Party scandal” involving applications for tax-exempt status by conservative-leaning groups, and a sharp reduction in funding have created a “perfect storm” for tax administrators and, consequently, the taxpaying public. “Taxpayers who need help are not getting it, and tax compliance is likely to suffer over the longer term if these problems are not quickly and decisively addressed,” wrote Olson. She also urged Congress to enact comprehensive tax reform to ease the burdens on taxpayers and the IRS alike.
Notably, the report describes the decline in taxpayer services in detail and attributes it to a combination of more work and reduced resources at the IRS. Here are some of the particulars:
Scope of taxpayer service needs: Almost 200 million Americans interact with the IRS each year, more than three times as many as any other federal agency. (Individuals file nearly 150 million returns, including about 50 million joint returns.) Due to the complexity of the tax code, vast numbers of taxpayers reach out to the IRS for assistance. Typically, the IRS receives more than 100 million telephone calls, 10 million letters and 5 million visits at its walk-in sites from taxpayers each year.
Decline in taxpayer service levels: Projected levels are the lowest they’ve been since 2001. Diminished service expectations for Fiscal Year 2015 are as follows:
- The IRS is unlikely to answer even half the telephone calls it receives. Levels of service may average as low as 43 percent.
- Taxpayers who manage to get through are expected to wait on hold for 30 minutes on average and considerably longer at peak times.
- The IRS will answer far fewer tax law questions it did in the past. During the upcoming filing season, it will not answer any tax-law questions except “basic” ones. After the filing season, it will not answer any tax-law questions at all, leaving the roughly 15 million taxpayers who file later in the year unable to get answers to their questions by calling or visiting IRS offices.
- Tax return preparation assistance has been eliminated.
More work, reduced resources: The IRS is receiving 11 percent more returns from individuals, 18 percent more returns from business entities and 70 percent more telephone calls (through FY 2013) than it did a decade ago. For the 2015 tax filing season, implementation of the Patient Protection and Affordable Care Act (PPACA) and the Foreign Account Tax Compliance Act (FATCA) are expected to pile even more work on IRS staffers.
On the resources side, the IRS’ budget has been reduced by about 17 percent in inflation-adjusted terms just since FY 2010. As a result, the tax collection agency has already reduced its workforce by nearly 12,000 employees and projects further reductions will be needed during FY 2015. Furthermore, the IRS has reduced the amount it spends on employee training since FY 2010 by 83 percent. These cutbacks leave the IRS with a shrinking workforce whose employees are less equipped to do their jobs.
Olson urged Congress and the IRS to work together to ensure that taxpayer needs are met. “We do not think it is acceptable for the government to tell millions of taxpayers who seek help each year, in essence, ‘We’re sorry. You’re on your own,’” she said in the report.
The NTA also focused on the need for passing Taxpayer Bill of Rights legislation. In 2014, the IRS adopted the Taxpayer Bill of Rights administratively, a step Olson praised. However, she continues to advocate for Congress to enact these provisions by statute to assure taxpayers that the rights will become a permanent part of our tax system.
“The National Taxpayer Advocate believes the time is right for taxpayer rights legislation,” the report continued. “The passage of time has shown where new protections are needed. Without providing these specific taxpayer protections, the [Taxpayer Bill of Rights] becomes merely a statement of principles, without any teeth to ensure that these fundamental rights are protected on a daily basis, and that taxpayers have remedies and the IRS is held accountable for any violations of these rights.”
The entire report, including an executive summary and downloadable graphics about features in the report, are available on the National Taxpayer Advocate site.
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...