Can tech improve taxpayer service? Only if it's bought and deployed

tax form and keyboard

It was the best of times, it was the worst of times. And it took a long time to get a human on the line.

"For the majority of taxpayers who filed their returns and did not require IRS assistance, the [2015] filing season was generally successful," National Taxpayer Advocate Nina Olson wrote in her mid-year report to Congress. "For the segment of taxpayers who required help from the IRS, the filing season was by far the worst in memory."

The report's lowlights:

  • The IRS answered only 37 percent of taxpayer phone calls, and those after an average 23-minute hold time.
  • Taxpayers whose returns were blocked on suspicion of identity theft were worse off: Only 17 percent of their calls were answered, following 28-minute waits (for three weeks in a row, only 10 percent of these calls were answered).
  • So-called courtesy disconnects "skyrocketed," shooting from roughly 544,000 in 2014 to 8.8 million this year -- a spike of 1,500 percent.
  • The IRS "sharply restricted" paper copies of tax forms, and local Taxpayer Assistance Centers couldn't order more when they ran out, leaving computer-less taxpayers struggling.

And things aren't likely to improve anytime soon.

It's all about the money?

"With funding down about 17 percent on an inflation-adjusted basis since FY 2010, and with the IRS having had to implement large portions of the Affordable Care Act and the Foreign Account Tax Compliance Act this year without any supplemental funding, sharp declines in taxpayer service were inevitable," Olson wrote.

The administration's budget request for fiscal 2016 would boost the IRS budget to $12.9 billion, up from $10.9 billion in fiscal 2015.

The IRS has big plans for the cash -- hiring nearly 3,000 new full-time staff to man phones, and pumping $16 million into a web-oriented Service on Demand (SOD) strategy -- but congressional Republicans are tightening the purse strings.

House and Senate Appropriations committees have approved bills that do the opposite of the presidential proposal, cutting the budget of the IRS.

"This bill will result in the continued erosion of the IRS's ability to accomplish its mission," National Treasury Employees Union President Colleen M. Kelley said of the Senate plan, which would shave $470 million off the IRS budget.

Managing the tech

Others maintain that money alone isn't the issue.

Government Accountability Office investigations have consistently determined that the IRS is capable of doing more with less, given more effective leadership.

The IRS takes in almost half a billion dollars a year in user fees -- money it can spend most any way it chooses. In fiscal 2014, about $60 million was reportedly spent on employee bonuses, more than three times what it planned to spend on SOD.

From the perspective of Jay McTigue, GAO's director of tax issues, the IRS needs to more effectively wrangle its many IT projects.

The SOD strategy, in particular, has "for a long time been at the concept level," without a concrete set of building blocks pushing it forward, McTigue said.

The idea behind SOD is to "improve[e] the taxpayer experience by understanding their wants, needs, and service channel preferences" and then "creating new digital capabilities" for the IRS to communicate with taxpayers, the agency wrote in its budget request.

Part of SOD: an "online web-based secure communications portal … enabling IRS and taxpayers to communicate by sending both one-way and two-way secure messages," which IRS was planning to pilot in fiscal 2015, GAO noted in a February report.

The last McTigue heard, that pilot hadn't been funded.

The IRS didn't respond to questions about SOD. "Taxpayers want and need more online tax information and services, and we're working to meet that demand by making improvements to our website," wrote an IRS spokesman in an emailed statement, touting 450 million page views last year. "Over the last several years, the IRS has been working to meet taxpayers' increasing demand for self-service and electronic service options by providing them with more web-based tools, to make their interactions with us simpler and easier."

The Treasury Inspector General for Tax Administration, however, echoed McTigue's call for better management.

In a May report on SOD, TIGTA advised an official reordering of IRS priorities to better reflect the crucial role online services will play in improving taxpayer service.

Doing less with less

While McTigue wouldn't say IRS could use more money -- "That's not what we do [at GAO]," he said -- he noted the agency has been facing tight budgets for years.

"They are doing more with less," McTigue acknowledged, given the Affordable Care Act and Foreign Account Tax Compliance Act responsibilities. But when it comes to traditional IRS functions, "they're doing less overall."

In inflation-adjusted terms, the IRS budget is at roughly the same level it was in 1998, he said.

Along with taxpayer service levels, audits have fallen off steeply in recent years.

And the "Get Transcript" application breach demonstrated how even the online services IRS has already pushed out can fail.

"In order for the IRS to move into the future, whether that's implementing Service on Demand or just reengineering their existing systems, it's going to take a certain amount of investment," McTigue said.

"For a tax system that relies on voluntary self-assessment by its taxpayers, none of this bodes well," Taxpayer Advocate Olson wrote. "In fact, there is a real risk that the inability of taxpayers to obtain assistance from the government, and their consequent frustration, will lead to less voluntary compliance and more enforced compliance."

As GAO's July 24 report on the IRS budget notes, however, the agency is hemorrhaging employees.

How the phones will be answered -- or how "enforced compliance" will actually be enforced -- remains to be seen.

About the Author

Zach Noble is a former FCW staff writer.


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