In January, the National Taxpayer Advocate delivered her annual report to Congress. The document is a “report card” on the service provided by the Internal Revenue Service (IRS) to its constituents—U.S. taxpayers. The report identifies problem areas and serious issues and does not flinch in providing recommendations to the IRS.
Erin M. Collins is the third National Taxpayer Advocate. Appointed in March 2020, Ms. Collins came on board with the Taxpayer Advocate Service (TAS) as the pandemic began its long stretch into the domestic and global community. In 2021, Ms. Collins strongly remarked on the poor service provided by the understaffed and under-resourced agency. This year is not terribly different. Following are some problems and recommendations provided by Ms. Collins in her report:
- The report notes the IRS has failed to pay timely refunds to taxpayers for three years running. The hitch is mainly in the submission of paper returns and documents. Additionally, millions of returns filed electronically were flagged by software filters for further analysis by the IRS. Despite some improvements in automatic processing, millions of taxpayers who filed by mail or electronically waited more than eight months to receive refunds—a circumstance Ms. Collins notes as “not acceptable.”
- Among other deficiencies, the report detailed IRS difficulties processing correspondence related to returns. Types of notices commonly sent by the IRS include those about math errors, collection notices, underreporting queries, or notices about 1099 or other forms. Many of these notices require a taxpayer response. The resulting delay in processing return correspondence from taxpayers led the IRS to take collection action against some filers whose responses the agency had not yet even logged and reviewed.
- As with the 2021 tax season, the failure of the IRS to respond to taxpayer telephone calls was epic. While the attention and resources of the agency were diverted to processing the enormous backlog of returns, attention to the ringing telephones continued to lag. Overall, the IRS answered approximately ten million fewer phone calls in 2022 than in 2021. In other words, about seven out of every eight calls went unanswered.
The report also details issues with appeals, foreign taxpayers, and agency transparency. Ms. Collins reports that taxpayers can expect improvement in 2023 due to additional Congressional funding, a significant decline in backlog, and the recent hire of customer service representatives and employees to staff in-person Tax Assistance Centers.
The mandate of the IRS is essential to the good governance of this country. The National Taxpayer Advocate clearly points out the agency could be doing a better job serving those who are paying the taxes to keep the lights on.
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