Even with its shrunken workforce, the Internal Revenue Service delivered a solid filing season performance this spring, the National Taxpayer Advocate said in a new report, but the agency needs to stress taxpayer education over strict enforcement and toughen supervision of private debt collectors.
Nina Olson, in her mandatory 2017 mid-year report, said the tax agency that has lost 20 percent of its workforce since 2010 had “a generally successful” filing season, processing almost 130 million returns with some 90 percent of them filed electronically.
IRS staff and temporary hires answered 79 percent of the taxpayer telephone calls received on “Account Management” lines, up from 72 percent last year. The time these callers spent on hold declined from 11.1 minutes to 6.5 minutes.
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On the downside, the agency had a worse record on answering the 2.7 million calls on its compliance telephone lines (called “Installment Agreement/Balance Due” lines). In handling “the sort of calls most private businesses would pick up immediately,” the report said, IRS answered only 40 percent, down from 76 percent the previous year, while wait times rose from 11 minutes in 2016 to a lengthy 47 minutes this year.
Olson continued her opposition to the congressionally imposed program to hire four private debt collection companies to go after long-overdue tax delinquencies. She said the private firms’ techniques will intimidate taxpayers who can’t afford to pay back taxes, and has recommended that IRS take steps to protect those who depend heavily on such programs as Social Security.
During past use of private collectors, the IRS staff had listened to a sample of phone calls made by the companies to ensure they didn’t violate taxpayer rights. But for the current program, Olson reported, the agency decided not to permit such listening in.
“Moreover, the IRS has declined to require all [private collection agency] employees working taxpayer cases to watch a training videotape by the National Taxpayer Advocate on protecting taxpayer rights,” the report said.
In the broader picture, Olson wrote that while taxpayer services and enforcement activities are both essential for effective tax administration, “taxpayer services require more emphasis than they are currently receiving.”
More than 60 percent of the IRS budget goes to enforcement while only about 4 percent is allocated for taxpayer outreach and education, her report said. As of last September, only 98 IRS employees were involved in outreach to 62 million small businesses and self-employed taxpayers, and 365 employees were conducting education and outreach to the nearly 125 million individual taxpayers. Due to budget cuts, Taxpayer Assistance Centers have stopped offering free tax preparation for low-income, elderly and disabled taxpayers, she added.
Olson reiterated her past recommendation that IRS adjust its mission statement to better balance enforcement with education, adding to her report, in a separate volume, the agency’s responses to 93 past recommendations. She noted that the IRS has been given a larger role by Congress as a benefits administrator (as in the Affordable Care Act). In 2009, the agency changed its statement from “applying” the law to “enforcing” the law, a switch done without consulting Congress’ tax-writing committees, Olson’s team noted.
In demurring, IRS officials said, “Merely because the IRS has a duty to conduct enforcement activities does not mean the agency’s culture is enforcement-oriented. Rather, the IRS is oriented toward helping all taxpayers come into full compliance with their federal tax obligations…. We will continue to pursue efforts that make tax compliance easier by creating an environment that encourages taxpayer trust and confidence.”
Olson expressed disappointment with that reply. “We continue to believe the IRS should revise its mission statement to explicitly acknowledge the foundational role of the Taxpayer Bill of Rights in administering the tax laws and the IRS’ dual roles of tax collector and benefits administrator,” she wrote.