Improvements on the Horizon at the Internal Revenue Service?

• January 27, 2023
• Courtney DeVane

The Taxpayer Advocate Service (or “TAS”) is an independent organization within the Internal Revenue Service (or “IRS”) that assists taxpayers in resolving tax problems, ensuring that all taxpayers are treated fairly and understand their rights.  National Taxpayer Advocate, Erin M. Collins, released her 2022 Annual Report to Congress earlier this month. 

Ms. Collins acknowledged that taxpayers and tax professionals “experienced more misery in 2022” due to paper processing delays and poor customer service; however, there is reason for optimism. Her report also notes that the IRS has made significant progress reducing its backlog and is poised to start the 2023 filing season in a stronger position than it has the previous two years. 

You may recall previous blog posts, “More Evidence of the IRS’ Recent Struggles” and “Here We Go Again (IRS Edition)” which highlighted the struggles at the IRS.  Although the IRS faced many challenges prior to the COVID-19 pandemic (budget cuts, an aging workforce coupled with insufficient hiring practices), the pandemic exacerbated these issues.  During the height of the pandemic, IRS employees struggled to complete their regular job functions, on top of being tasked with administering three separate rounds of stimulus payments.

Ms. Collins’ 2022 report highlights the following taxpayer service challenges:

• Return processing and refund delays.
• Delays in processing taxpayer correspondence and other cases in the Accounts Management function.
• Difficulty reaching the IRS on its toll-free telephone lines.

The report also cites three main reasons for optimism:

• The IRS has largely worked through its backlog of unprocessed tax returns.  This will enable the IRS to begin processing paper-filed 2022 returns during the upcoming filing season.  This contrasts with the previous two years when the IRS was unable to process current year paper-filed returns until months after the filing season had already ended.
• In August 2022, Congress enacted the Inflation Reduction Act (or “IRA”) which provided the IRS with funding of about $80 billion over the next ten years to supplement its annual appropriations.  This will allow the IRS to increase its customer service staffing.
• The benefit of Direct Hire Authority has allowed the IRS to recently hire 4,000 new customer service representatives and is seeking to hire 700 additional employees to provide in-person support at its Taxpayer Assistance Centers.  Direct Hire Authority has reduced the time it takes to post a job position and onboard a new employee by more than half.

“We have begun to see the light at the end of the tunnel […] I am just not sure how much further we have to travel before we see sunlight.” 

Ms. Collins, National Taxpayer Advocate

Fingers crossed that the process and customer service improvements lead to a more effective IRS in 2023.

Sources:  IRS.gov, Taxpayer Advocate Service

Tags: IRS, Real Estate, Federal and state taxation, including proposed regulations, Industry best practices, Industry trends/analysis, Year-end tax planning | Comments Off on Improvements on the Horizon at the Internal Revenue Service?