A billion-dollar federal effort to modernize the Internal Revenue Service has yet to solve the agency’s struggles with answering customer calls, remediating identity theft or processing amended tax returns, the agency’s watchdog told Congress on Wednesday. Wrote in a report.
The annual report from the Office of the National Taxpayer Advocate comes as the agency faces deep cuts in new funding, meant to help solve long-standing issues including a backlog of tax returns and weak customer service. Was.
A spending deal in Congress to fund the federal government would return about $20 billion of the $80 billion the IRS received from the Inflation Cut Act of 2022. Republican lawmakers are eager to claw back even more money from the agency, even as it tries to sharpen its focus. Its energy is on improving customer service and accountability to taxpayers.
Despite continued challenges, National Taxpayer Advocate Erin M. Collins praised the IRS for eliminating much of the backlog of unprocessed tax returns and improving its accountability.
“Overall, the magnitude of the successes outweighed the areas of weakness in 2023, and most metrics showed significant improvement from the depths of the pandemic,” Ms Collins said in a statement.
The report, which outlines 10 areas in which the IRS needs to improve, described efforts to be more accessible as a “marathon” and said the agency has not been as successful on that front as its officials suggested. Was.
Although the IRS said its telephone wait times had declined and it was answering 85 percent of calls during the 2023 tax filing season, the report said those numbers were misleading. The watchdog said the “level of service” metric the IRS used did not take into account many calls made to the agency and answered only 29 percent of the calls it received for the entire 2023 fiscal year .
The report also highlights problems with how the IRS deploys its staff and says it is not being done efficiently. Customer service representatives were often working when call volume was low. As a result, agents were often “simply sitting around waiting for the phone to ring,” the report said, despite the fact that callers routinely could not reach anyone during busy periods.
Ms. Collins said, “The IRS cannot easily move staff back and forth between answering phones and processing correspondence, so unproductive staff time was the price it had to pay for improving the level of telephone service.”
In an interview Wednesday, IRS Commissioner Daniel Werfel defended the agency’s performance and said progress has been made. However, he acknowledged that there is still more work to be done.
“I think some important progress has been made and some important building blocks are in place,” Mr. Werfel said. “I have never tried to imply, either explicitly or implicitly, that any victory lap is appropriate.”
Mr. Werfel argued that the IRS has made progress in answering phone calls over the past year and that the agency is working to upgrade its systems so it can more efficiently deploy staff to handle calls during peak times. Could. He also said that upgrading the agency’s website is a top priority this year, which will help the IRS become more responsive.
The challenges may become more difficult to resolve if Republicans succeed in further defunding the agency.
The Biden administration has argued that a strong tax collection agency is key to reducing the “tax gap,” or government revenue that is not collected. The Treasury Department estimates the shortfall will exceed $600 billion per year and warns that starving the IRS of resources is harmful to taxpayers.
Treasury Secretary Janet L. “I don’t want to jeopardize those efforts,” Yellen told reporters Monday, referring to the agency’s modernization plans, but she expressed hope that even if some funds are taken out, efforts will be made to revitalize the IRS. ” Still go ahead.
“In the short term, certainly in the medium term,” he said, “the IRS will be able to continue its important work in modernizing our tax system.”
Mr. Werfel said he did not expect the funding cuts to affect the IRS’s spending plans in the short term, but he said the agency might have to scale back its ambitions if the money was not restored.
“We are going to hit a rock at some point in the future,” Mr. Werfel said.