The Internal Revenue Service answered nearly twice as many phone calls from customers during the 2016 tax filing season compared to the year before.
The agency attributed its relative success to the additional $290 million it received from Congress this year to improve customer service and strengthen its cybersecurity. But the chances that Congress will continue the trend and give the agency more funding in 2017 are looking slim.
The House passed the Financial Services and General Government Appropriations bill last week, which cut the IRS budget by $236 million below the 2016 enacted level.
The Senate’s version, which has yet to pass, sets IRS funding at more or less the same level as fiscal 2016.
According to the National Taxpayer Advocate’s mid-year report to Congress, taxpayers waited an average of 11 minutes on the phone during the 2016 filing season — nearly half the time customers spent waiting in 2015 when average times soared to 23 minutes. The agency answered 73 percent of taxpayer phone calls this year, compared to 37 percent during the previous season.
IRS Commissioner John Koskinen said he’s trying to show Congress what his agency can accomplish with a small amount of more funding.
“Our hope is that as we’ve demonstrated to the Congress the great utility of the additional funding we got this year, that that will serve as a basis for an additional increase next year, which would be devoted to cybersecurity, identity theft and taxpayer service,” Koskinen said during a June 28 press conference.
But the House bill sets funding for the agency next year at $10.9 billion — $1.3 billion below the President’s budget request. It does include a familiar provision that would give the IRS an additional $290 million next fiscal year. The provision requires that IRS use the additional funding to “make measurable improvements in the customer service representative level of service rate, to improve the identification and prevention of refund fraud and identity theft and to enhance cybersecurity to safeguard taxpayer data.” Congress put the IRS under the same provision in 2016.
The 2017 House bill also prohibits the IRS from handing out bonuses to its managers and employees. Another amendment prevents the agency from rehiring former employees, unless the IRS formally assesses the person’s tax compliance history and conduct.
Taxpayer Advocate skeptical of Future State plans
Although the mid-year report suggests the IRS made substantial customer service improvements during the 2016 filing season compared to the previous year, Taxpayer Advocate Nina Olson said a lack of funding is still a major contributor to several other problems at the agency.
The budget is a main driver behind the IRS Future State program, which describes the agency’s vision to use more online taxpayer accounts and fewer in-person and over-the-phone customer service options.
Before Congress in April, Olson bashed the IRS’ plan to move more of its services online. Her mid-year report describes some of the efforts the agency has taken on so far.
For example, as the IRS expects to eventually eliminate all of its taxpayer assistance centers (TACs), the agency will soon require that taxpayers schedule advance appointments for all TACS by the end of the year. Under a pilot program to test this service, 20 percent of taxpayers waited between 13 to 41 days to receive an appointment, the report said. About 5 percent of taxpayers waited for more than 41 days.
Those wait times are too long for taxpayers with urgent tax needs, Olson said.
The IRS also released a multi-factor authentication process when it brought Get Transcript, the online service that gave the public electronic access to previous tax returns, back online in June.
But Olson said many taxpayers are struggling to connect with the service.
“Only about 30 percent of taxpayers seeking to register for the IRS’s ‘Get Transcript’ application over the last month were able to do so because of enhanced authentication measures, which suggests many taxpayers may not even be able to establish online accounts in the current environment,” the Advocate wrote in a summary of the report.
Improving cybersecurity and measures to protect taxpayer data is one key component to the IRS Future State plan.
Olson compiled feedback from eight public forums with taxpayers, members of Congress, tax practitioner organizations and IRS advisory committees to inform her mid-year report. More forums are planned for the rest of the year.