The IRS made it through the 2015 tax filing season in one piece, but a new audit affirms the warnings of customer service issues and new challenges to combat fraud.
In a report released by the Treasury Inspector General for Tax Administration, auditors found the IRS did what it could to prepare for a frantic season by establishing a new tax code and diverting services to its online and mobile assets to cover a shortage of resources.
TIGTA determined the IRS processed tax returns accurately and in a timely manner, and implemented tax legislation for the 2015 filing season correctly.
The IRS received more than 137 million tax returns in 2015, up by 1.1 million from 2014.
TIGTA runs a tax season audit every year, but the Treasury Department took care to monitor 2015 closely since it’s the first tax season with legislative impact from the Affordable Care Act, the Premium Tax Credit (PTC), and other bills. TIGTA plans on running a full audit on whether IRS procedures for processing PTC claims were correct later this year.
Social media self-help, TAC rates drop
The IRS saw a spike in page views for its social media outlets such as Twitter, Facebook and YouTube for self-help assistance with filing taxes, and about 87 percent of taxpayers filed electronically through online outlets such as the IRS website and the IRS2Go mobile app.
Despite its gains on digital outlets, the IRS struggled to help taxpayers on traditional ones, sinking to a 37.6 percent success rate on its customer assistance phone line with a 23 1/2 minute average wait time.
That’s more than a 33 percent drop for customer service levels and a 12 minute spike in wait time from 2014.
Walk-ins at the IRS’ face to face help centers dropped to 5.3 million, a decrease of 200,000 from 2014. TIGTA attributed the drop to the IRS’ efforts to divert services to other outlets such as its website to offset staffing shortages.
Strengthening the IRS
The IRS had issues processing certain tax credits.
TIGTA found the IRS mishandled tax returns for educator expense deduction claims, incorrectly denying qualifying taxpayers $53,988 in refunds, and denied more than $1.5 million in residential energy credit claims when employees mistakenly limited refunds.
The audit also noted that efforts should be strengthened to stop fraudulent tax returns from being filed. While controls that identify fraud stopped $787 million in false claims from going through the wrong filers, the IG found there are no directives in place to stop multiple deposits from being made into the same account.
TIGTA recommended the IRS combat tax fraud by putting additional systems in place so that no more than three tax return direct deposits can be submitted to a single account.
The IRS agreed with all of TIGTA’s recommendations and has already sent out corrected returns for the educator expense deductions
Organizations have long warned ongoing budget cuts to the IRS would eventually lead to major problems in customer service.
A Report to Congress from the National Taxpayer Advocate noted the Hill has cut the IRS’ budget by about $1.2 billion since 2010. The House Appropriations Committee approved a budget of $10.1 billion for 2016, about $838 million less than current funding.
The budget pinch has forced the agency to freeze hiring despite attrition.
“The decision by Congress to slash funding for the IRS by a total of $1.2 billion in the past five years has been disastrous for taxpayers and the economy,” said Tony Reardon, national president of the National Treasury Employees Union. “Despite widespread recognition that IRS needs increased funding, Congress is proposing steeper cuts for next year. Additional cuts would be devastating.”