Wednesday, September 27

‘IRS is finally answering the phones’ but struggles with technology as Tax Day nears

WASHINGTON — It’s been easier this year to get in touch with someone at the Internal Revenue Service.

“IRS is finally answering the phones,” said Claudia Stanley, a certified public accountant in Fresno, California.

In Washington, the finding was the same — thanks to improved staffing and training, IRS service is getting better and there’s new optimism it can get stronger in the years ahead.

“For the first time in my 40 years as a tax professional, the tax administration stars seem to be aligning,” said Erin Collins, the National Taxpayer Advocate.

The IRS last week released a 150-page report on how it plans to use the $79.6 billion Congress and President Joe Biden approved last year for agency improvements.

Collins did have some reservations. She said only about 10% of the money will be used for taxpayer services and systems modernization. The rest is for enforcement and operations.

She suggested more should be dedicated to improving the service problems that have plagued the IRS for years. If not, Collins predicted, the new money for improved consumer service would be depleted in four years.

She also questioned whether there was enough funding allocated to modernize what she called “the agency’s antiquated IT (tech) systems.”

IRS’ phones

The promising news is that the much-maligned IRS phone system is working better.

Collins found that in recent years, “trying to reach the IRS by phone was next to impossible.”

She said IRS employees answered 11% of taxpayer calls in fiscal 2021, the 12 month period that ended on Sept. 30, 2021, and 13% in the next 12 months.

This year, she said, phone service has “improved substantially” as the IRS has hired thousands more customer service representatives.

IRS Commissioner Danny Werfel tended to agree with Collins’ analysis. Because of poor phone service, he said, “Millions of people could not get the help they needed as they tried meeting their tax obligations.”

Recently, the agency has hired more than 5,000 “phone assisters,” and Werfel said that’s made an immediate difference.

Tax preparers and consumers have seen that change.

“I’ve only had to interact with them (IRS) a few times this season and it was a very short wait time on the phone. It’s so nice to be able to help clients timely resolve their issues,” Stanley said.

Then again, one reason tax preparers have an easier time is that they’ve learned how to use the IRS system.

“The IRS is starting to respond a little more quickly. Most of us have stepped away trying to get anything in writing. We know the backlog is still an issue,” said Tom O’Saben, director of tax content and government relations for the National Association of Tax Professionals.

Lee Reams, chief technical officer for TaxBuzz and CountingWorks Inc., a Newport Beach-based company that provides services for tax professionals, said that in the recent past, “getting through to the IRS was virtually impossible.”

As a result, he said, “it was impossible for practitioners to resolve issues resulting in the IRS computer spitting out ever menacing notices to practitioner’s clients, compounding the problems.”

Persistent IRS trouble

Serious service problems persist. Collins found technology tends to be outdated and many preparers have found it can take months to get paper returns processed — and months to get the IRS to resolve problems it finds in any filings.

“I tell people not to file a paper return if at all possible,” O’Saben said.

As of March 31, the IRS this tax season has processed 89.6 million individual income tax returns, about the same number as this time last year.

As the IRS tries to improve, it still can be prone to stumble, particularly when technology is involved.

“They are understaffed, underfunded, and have antiquated computer systems,” said Alma Guenther, an enrolled agent, the highest credential the IRS awards to tax professionals, and TaxBuzz community member from Fairfield. “Not to say all employees are trouble. Some are very good and helpful. But many are under-trained and have people skills lacking.” TaxBuzz is an online community for taxpayers and tax professionals who can offer tax guidance.

In its strategic plan, the IRS lists as a priority updating “various outdated systems in IRS core operations to help ensure the agency has the most modern and robust security in technology to protect taxpayer data.”

Collins was cautiously optimistic.

“The IRS has developed an ambitious, albeit general plan to transform tax administration, and a new commissioner with significant management experience has just taken office with a mandate to implement the plan and transform the taxpayer experience,” she said.

But Collins also had a qualifier: “Developing a plan and successfully implementing it are two different things.”

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