Every year the National Taxpayer Advocate submits a report to Congress identifying the most significant issues encountered by taxpayers. On January 14th, 2015, National Taxpayer Advocate Nina E. Olson released the 2015 annual report which expresses concern that taxpayers will experience the worst service since 2001 when the IRS implemented its current performance measures. In the report’s preface she detailed the following four points:
- “First, the budget environment of the last five years has brought about a devastating erosion of taxpayer service, harming taxpayers individually and collectively;
- “Second, the lack of effective administrative and congressional oversight, in conjunction with the failure to pass taxpayer rights legislation, has eroded taxpayer protections enacted 16 or more years ago;
- “Third, the combined effect of these trends is reshaping U.S. tax administration in ways that are not positive for future tax compliance or for public trust in the fairness of the tax system; and
- “Fourth, this downward slide can be addressed if Congress makes an investment in the IRS and holds it accountable for how it applies that investment.”
She goes on to explain, “Taxpayers who need help are not getting it, and tax compliance is likely to suffer over the longer term if these problems are not quickly and decisively addressed.”
Olsen attributes the decline in taxpayer service to the following factors:
Scope of Taxpayer Service Needs. About 200 million taxpayers interact with the IRS yearly; that’s triple the number of individuals interacting with any other federal agency. And because of the complexity of the tax code, many of these individuals are looking for assistance in completing their returns. The press release states, “The IRS typically receives more than 100 million phone calls, 10,000 million letters, and 5 million visits.”
The decline in Taxpayer Service Levels. In 2004 87% of taxpayer phone calls were answered, with an average hold time of 2.5 minutes. Expectations for 2015 include a 43% answer rate, with an average hold time of 30 minutes.
More Work, Reduced Resources. A couple of weeks ago we learned that Congress cut the IRS budget by 1.5 billion. In addition, they are required to comply with a mandated federal employee pay raise of one percent. This leaves the IRS with fewer resources, including a reduction in its workforce by 12,000 employees. Olson explains, “The only way the IRS can assist the tens of millions of taxpayers seeking to speak with an IRS employee is to have enough employees to answer their calls. The only way the IRS can timely process millions of taxpayer letters is to have enough employees to read the letters and act on them. And the only way the IRS can meet the needs of the millions of taxpayers who visit its walk-in sites is to have enough employees to staff them.”
Other Issues Addressed
In addition to the Taxpayer Bill of Rights, the following issues were also addressed:
- Lack of clear rationale for taxpayer service resource allocation decisions.
- Lack of a functional IRS presence in many areas.
- Potential Patient Protection and Affordable Care Act (ACA) burdens.
- Offshore Voluntary Disclosure (OVD) Program inequities.
- New TAX research studies.
The National Taxpayer Advocate submits two annual reports to the House Committee on Ways and Means and the Senate Committee on Finance. The first report is due every year at the end of June and must detail the TAS’s objectives for the upcoming fiscal year. The second report is due on December 31st, and, in addition to other requirements, must identify 20 of the most serious problems encountered by taxpayers.
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–. “National Taxpayer Advocate Delivers Annual Report to Congress: Focuses on Taxpayer Service and Taxpayer Bill of Rights.” 14 January 2015 IRS.gov