The Internal Revenue Service typically receives more than 100 million telephone calls, 10 million letters and 5 million visits from taxpayers each year.
In fiscal 2015, the IRS is unlikely to answer even half of the calls it receives and hold times are expected to exceed 30 minutes on average — even longer at peak times.
National Taxpayer Advocate Nina E. Olson released her 2014 annual report to Congress on Wednesday. Her top concern: taxpayers are likely to receive the worst levels of service this year.
A shortfall of this magnitude has not been seen since at least 2001 when the IRS implemented its current performance measures, she says.
“As we begin 2015, the widening imbalance between the IRS’ increasing workload and its shrinking resources leads us to designate it the No. 1 problem for taxpayers,” she writes in the report, which is released as part of the Taxpayer Advocate Service, an independent organization within the IRS.
TheIRS is receiving 11% more returns from individuals, 18% more returns from business entities and 70% more telephone calls (through FY 2013) than a decade ago, Olson writes, and the workload is not likely to let down in the upcoming filing season. Olson says the implementation of the Patient Protection and Affordable Care Act and the Foreign Account Tax Compliance Act are both expected to add considerable new work.
And while the IRS’ workload is increasing, its resources have been dwindling over the last five years. According to report, the IRS’ budget has been reduced by about 17% in inflation-adjusted terms since fiscal 2010 — leading to a reduction in its work force by nearly 12,000 employees, with projections that further reductions will be needed during fiscal 2015, along with an 83% reduction in time spent on employee training.
“The only way the IRS can assist the tens of millions of taxpayers seeking to speak with an IRS employee is to have enough employees to answer their calls,” writes Olson in the report. “The only way the IRS can timely process millions of taxpayer letters is to have enough employees to read the letters and act on them. And the only way the IRS can meet the needs of the millions of taxpayers who visit its walk-in sites is to have enough employees to staff them.”
The combination of the IRS’ increasing workload and the sharp reduction in funding have, the report says, created a “perfect storm” of trouble for both the tax administration and taxpayers.
“Taxpayers who need help are not getting it, and tax compliance is likely to suffer over the longer term if these problems are not quickly and decisively addressed,” Olson writes.