Poor IRS customer service hurts taxpayers

Shrinking budgets, smaller staff have created an agency less and less able to help people who need it.

For the average taxpayer, the waits are long and often futile: 39% of those who called the IRS last year simply hung up before their call was answered, according to a scathing recent report by the IRS Taxpayer Advocate, whose job is to take the taxpayer’s side at the IRS. (The IRS typically responds to the report at midyear.) And it’s only going to get worse. “Given our very limited resources, phone lines will be very busy, and there will frequently be extensive wait times,” IRS Commissioner John Koskinen said on the agency’s official YouTube video about the 2013 tax year.

And as much as people love to hate the IRS, the agency’s problems become taxpayer’s problems. Poor customer service means that many more people will pay someone else to do their taxes, which simply becomes another cost of dealing with the federal government. And for some people, the IRS’s woes mean that basic mistakes in filing could ultimately become big costs that involve fines, penalties, liens.

IRS customer service has been struggling for the past three years, and the cause is fairly simple: Congress has consistently cut its budget.

At the same time, the IRS lost 8,000 employees between 2010 and 2012, says Edward Jenkins, tax director at CBIZ MHM, an accounting firm in Plymouth Meeting in suburban Philadelphia, Some of that is because of the aging of the IRS workforce, Jenkins says . In the government’s fiscal year 2017, 70% of IRS executives and half of non-executives will be ready to retire, he says.

And tight budgets mean that it’s hard to keep good employees, particularly when they can work for better pay at CPA firms elsewhere. “You’re seeing very few pay raises, which makes it not exactly a great place to work,” Jenkins says.

Fewer workers and less training mean the IRS is less able to help taxpayers, particularly the elderly and disabled. Ten years ago, according to the IRS, the agency prepared 476,000 tax returns for those taxpayers. It will do none in the 2013 tax filing season, the Advocate’s report says.

Its voluntary compliance rate is about 83%, meaning that about 17% of tax revenue that should have been collected wasn’t. In 2006, that was $450 billion — enough to build 10 Nimitz-class aircraft carriers.

Some of that $450 billion is, of course, willful tax evasion.

As tax season hits its stride, the IRS is already warning taxpayers not to call. “The IRS reminds taxpayers the Presidents Day holiday period typically marks one of the busiest weeks of the tax filing season for its phone lines,” the statement said. Their advice: Go to the website, instead.

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