As the Internal Revenue Service begins processing an expected 148 million individual income tax returns for 2013, IRS Commissioner John Koskinen is apologizing to taxpayers for the sorry state of telephone and walk-in service and urging them use www.IRS.gov instead.
Last year, only 60.5% of taxpayers who called the IRS’ toll-free assistance line got through to a human being and then only after an average of 17.6 minutes on hold. In a tax season kick-off press conference today, Koskinen said the IRS had been hoping to answer 78% to 80% of calls this year. But after the 2014 budget deal failed to restore the budget sequester cuts imposed on the IRS, the agency is setting its sights lower. “We don’t expect that our customer service is going to be able to improve very much,’’ Koskinen said, adding “we would love” to get as high as 70% of calls answered during this filing season. By contrast, the IRS answered 87% of phone calls in 2004 and 74% in fiscal 2010, when its budget hit $12.1 billion. Under the budget deal Congress passed this month, the IRS is getting just $11.3 billion for fiscal 2014, a half a billion less than in 2013. Despite the growth in tax returns filed and the IRS’ expanded duties administering ObamaCare, its staff is down 8% from 2010. Never a favorite of Republicans, the agency seems to be paying an additional price for its dubious handling of tax exempt applications from Tea Party affiliated groups.
Along with phone service, the IRS has cut back services at its walk in Taxpayer Assistance Centers, where lines can be long. This year, workers in those centers will no longer answer “complex” tax law questions, only “basic” ones and will no longer prepare tax returns for low-income and elderly taxpayers. (Low income taxpayers can still get help from volunteer preparers through the IRS’ VITA program , while the elderly can get in-person help from TCE and AARP volunteers.)
“I personally just find that unacceptable,’’ Koskinen said of the phone and TAC service delays. “If people are trying to pay their taxes, they ought not to have to stand in a long line, they ought not to have to hang on the phone for up to half an hour. They ought to be able to get somebody on the phone.’’
Still, he touted the continuing improvements to IRS.gov (which got 456 million visitors last year) and urged taxpayers to look there for answers about taxes and their own situations. To reduce the amount of personal assistance required, the IRS has been adding services to its web site, including the wildly popular Where’s My Refund. which lets taxpayers check on the status of refunds if they’ve filed their 1040s recently. New this year, they can also go on line to request copies of their past tax returns, delivered either by mail or electronically. Taxpayers who are computer savvy and have incomes of $58,000 or less can file for free through the IRS’ Free-File program. In addition, both the TurboTax unit of Intuit and H&R Block offer free on-line filing to taxpayers of any income level who have relatively simply returns. (No Schedule C or C-EZs, for example.) TaxAct, a unit of Blucora (formerly InfoSpace) offers free federal filing for almost all forms, but its free service is not as convenient as the product you must pay for.
The strain on the budget cut IRS is even worse because of the resources it has had to devote to combating the epidemic of tax refund related identity theft, which has so far affected a million taxpayers. “We understand it is a disaster for an individual taxpayer to get caught up with this,’’ Koskinen said. “If we can’t stop the improper refund before it goes out the door, then your tax file is polluted with all this.” It had been taking the IRS nearly a year, on average, to resolve problems for identity theft victims—a time that has been reduced to 125 to 135 days, the Commissioner said. While he was not so brave (or foolhardy) as to declare victory over identity theft, he did venture that additional refund screens and other enforcement efforts could mean that in the next year or two, the IRS will “get a better handle” on the problem.
For example, Koskinen noted, in one pilot program, the IRS is allowing some residents of the three jurisdictions with the highest rate of identity theft (Florida, Georgia and the District of Columbia), to set up verification questions when they e-file their returns. Such personalized questions—known as “out-of-wallet” or knowledge-based-authentication questions—have long been standard in the private sector.