The voices of Tax Policy Center's researchers and staff
Remember the old marketing cliche: “I don’t care what you say about me as long as you spell my name right.” In the Internet age, it seems to apply more than ever—at least for many politicians, athletes, and celebrities. But not for the Internal Revenue Service.
Yet here we are in the midst of tax filing season and the IRS is in the headlines. And, predictably, not in a good way.
In an ideal world, the tax collector would quietly and uneventfully process returns far below the gaze of news organizations or Twitter. It would be competent and boring.
There would be only two stories about filing season: First, the agency would announce which day in January taxpayers could begin filing returns. Then, on April 15, or thereabouts, filing season would end and the IRS would report routine data such as how many returns it received and how many refunds it sent. In between, the IRS would process those returns with no fuss, and filers would get their refunds or pay any balances they owed. And people like me would never write a word about the process.
That is not what’s happening.
Indeed, in what is likely an effort to lower expectations of the public and the agency’s congressional overseers, the IRS itself has been warning that this filing season may be the worst in memory. Its message to taxpayers: File electronically, request direct deposit of your refunds, and don’t make any errors. If you do all those things, you should get a refund within three weeks. If not, all bets are off.
What’s gone wrong? Practically everything. Congress starved the agency of resources for more than a decade. Experienced staff and managers are leaving. The agency can’t fill even the vacancies it has. Its technology is archaic. Hackers are trying to steal taxpayer identities. Tax avoidance is increasingly sophisticated. And then there is the pandemic.
All this is happening while an ever-parsimonious Congress keeps giving the agency more to do with ever-insufficient resources. Manage compliance with the Affordable Care Act. Distribute economic impact payments to more than 175 million households. Do it three times in less than two years. At nearly the same time, create a system for distributing monthly Child Tax Credits to the parents of 61 million children under one set of rules. Then, due to congressional inaction, apply different rules and stop paying monthly.
Oh, and close the tax gap without ever abusing any taxpayers.
IRS staff is now 20 percent smaller than it was in 2010. Its customer service staff fell from more than 18,000 in 2010 to 12,000 in 2020. Its examinations staff dropped from more than 47,000 to fewer than 31,000.
The pandemic forced the agency to shutter its offices for months in 2020. Even after it reopened, many of its employees kept working from home. Unfortunately, a combination of antiquated data systems and special security needs means much of its work can’t be done remotely. So, lots wasn’t done at all.
The backlog is enormous. The Washington Post reported last week that the IRS still is processing nearly 24 million returns and other pieces of paper from prior years. That is not only extraordinary, it is about 10 million worse than the Taxpayer Advocate Service (TAS) reported just weeks earlier.
It is so bad that the agency has stopped sending notices to taxpayers about prior year issues. Why? Because taxpayers would have to respond by mailing back even more documentation. And while it is focused on processing this year’s returns, the agency simply cannot handle any more paper from prior years. (There is no other realistic way besides snail mail to respond to the agency since it doesn’t communicate with taxpayers through email or text and is not able to answer the vast majority of telephone calls it receives).
About those unanswered calls. Thanks to economic impact payments and other pandemic-related issues, volume tripled in fiscal year 2021 to 282 million calls, according to the TAS. But the agency answered only about 11 percent of those queries. The rest? Taxpayers either gave up or were hung up on. The TAS calculates the agency had one customer service representative for every 16,000 phone calls.
This is, unfortunately for the IRS, news. So are its declining audits. And its controversial attempts to prevent identity theft. The IRS never will be loved. But it would be nice if it could stop making news.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
Pool via AP/AP Photo