The Internal Revenue Service this week announced that Congress has received the National Taxpayer Advocate’s 2019 Annual Report to Congress.
What is the National Taxpayer Advocate Service Annual Report to Congress?
The 2019 Annual Report to Congress is one of two annually produced documents that the National Taxpayer Advocate Service (TAS) sends to legislators. While the mid-year Objectives Report predictably outlines what the TAS hopes to accomplish, the Annual Report serves as an independent year in review of the IRS’s performance.
According to the TAS website, “The Annual Report includes analysis of at least 20 of the most serious problems encountered by taxpayers, legislative and administrative recommendations for solving those problems, and a discussion of the year’s ten most frequently litigated tax issues.”
Since these reports are created without influence from anyone outside of TAS—not even the IRS Commissioner or Treasury Secretary—we can assume the report’s findings are representative of the Taxpayer Advocate’s goals for the future of the IRS.
What did the Taxpayer Advocate cover in the 2019 Annual Report to Congress?
Of the 20 or so issues contained in the Annual Report, the IRS press release explicitly highlights how problems with providing adequate customer service have impacted the rollout of the Taxpayer First Act.
The Taxpayer First Act of 2019 requires that the IRS takes steps to provide the best possible customer service to taxpayers by creating plans that address four key areas:
- a comprehensive taxpayer service strategy (due to Congress by July 1, 2020)
- a comprehensive plan to redesign the IRS's organizational structure (due to Congress by Sept. 30, 2020)
- a comprehensive employee training strategy that includes taxpayer rights training (due to Congress by July 1, 2020)
- a multi-year plan to meet IRS information technology (IT) needs
TAS specifically cites a low percentage of answered customer service calls (just 29% during last filing season) and broader issues with tax collection as major stumbling blocks.
When it comes to the money brought in by the IRS, the TAS report included a surprising projection using data from 2013: “Each U.S. household is effectively paying an average annual ‘surtax’ of more than $3,000 to subsidize noncompliance by others.”
Perhaps making matters worse, TAS says the application of automated enforcement efforts—coupled with the agency’s reduced ability to answer phone calls—means “taxpayers often cannot reach the IRS to make it aware of their hardships.”
What solutions does the Taxpayer Advocate recommend?
TAS seems to lay the blame for many of the customer service shortcomings at Congress’ feet: “Since FY 2010, the IRS budget has been reduced by about 20% after adjusting for inflation, and the number of full-time equivalent employees has declined by about 22%.”
Simply put, without proper funding, the IRS will remain understaffed and lack the resources required to carry out its mission. That said, TAS also believes the Taxpayer First Act can help the agency resolve some of these issues, urging that it can serve as “a roadmap for a once-in-a-generation reassessment of its objectives and operations.”
To help the IRS start making these changes, TAS made six recommendations:
- Conduct multi-disciplined, comprehensive research into taxpayer needs and preferences.
- Require that all IRS business units, including those charged primarily with enforcement, develop a detailed customer service strategy.
- Appoint a Chief Customer Experience Officer to coordinate service initiatives across IRS business units.
- Ensure that taxpayers who cannot work with the IRS digitally or whose issues are not resolved online can reach and work with an IRS employee.
- Address the needs of practitioners who interact with the IRS on behalf of large numbers of taxpayers.
- For each proposal included in its customer service strategy, include cost estimates, milestones, and taxpayer-focused performance measures so the effectiveness of the strategy in improving customer service can be measured over time.
To check out the rest of the Taxpayer Advocate’s report—which includes information on processing delays, the IRS IT infrastructure, and more, visit TaxpayerAdvocate.IRS.gov/Reports and click the 2019 Annual Report to Congress link.