IRS Funding Cut Despite Claims Made in Annual Report

Post Date: 1/27/14
Last Updated: 1/28/14


Cross References
- National Taxpayer Advocate 2013 Annual Report to Congress
- Consolidated Appropriations Act of 2014

On January 9, 2014, National Taxpayer Advocate Nina E. Olson issued her annual report to Congress stressing the need for more IRS funding. The report identifies the lack of adequate IRS funding as a top problem for taxpayers. Each year, more than 100 million taxpayers call the IRS for help and millions more visit IRS walk-in sites or send correspondence. Key metrics show the IRS is increasingly unable to keep up with taxpayers' demand for help in complying with their tax obligations. The report points out that federal spending cuts, which are designed to reduce the budget deficit, have the effect of increasing the deficit when applied to the revenue collection agency.

The report highlights key areas in which the quality of taxpayer service has dropped to unacceptable levels:
- Last year, the IRS could only answer 61% of calls from taxpayers seeking to speak with a customer service representative (CSR). That's down from 87% ten years earlier, with half the decline occurring since fiscal year (FY) 2010. In FY 2013, 39% of calls (some 20 million) simply did not get through.
- Taxpayers who did get through had to wait on hold approximately 17.6 minutes before speaking with a CSR. That's up from 2.6 minutes ten years earlier, a nearly six-fold increase, with nearly half the increase occurring since FY 2010.
- Millions of taxpayers visit IRS walk-in sites each year for assistance. Ten years ago, the IRS answered some 795,000 tax law questions in the sites during the filing season. Last year, it handled about 110,000 tax law questions during the filing season—a reduction of 86%.
- The IRS historically has prepared tax returns for taxpayers seeking its help, particularly for low income, elderly, and disabled taxpayers. Ten years ago, it prepared some 476,000 returns. That number declined significantly over the decade, and the IRS recently announced it will no longer prepare returns at all.
- Last year, the IRS received about 8.4 million letters from taxpayers responding to proposed adjustments to their tax liabilities. As of the end of the fiscal year, 53% of taxpayer letters in the IRS's "adjustments" inventory were considered "over age" (generally, more than 45 days old). That compares with "over age" percentages of 12% ten years earlier and 28% in FY 2010.
- The IRS recently announced it will only answer "basic" tax law questions on its telephone lines and in its walk-in sites during the upcoming filing season and it will not answer any tax law questions after the filing season, including questions from the millions of taxpayers who obtain filing extensions and prepare their returns later in the year.

Olson made clear that the deficiencies in taxpayer service are attributable primarily to a lack of resources. Regardless of cause, she wrote, "it is a sad state of affairs when the government writes tax laws as complex as ours—and then is unable to answer any questions beyond 'basic' ones from baffled citizens who are doing their best to comply."

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