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Got a Tax Question for the IRS? You’re in for a Long Wait

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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.

Olson urged Congress and the IRS to work together to ensure that taxpayer needs are met and recommended short- and long-term actions for Congress to take regarding taxpayer service.

As a short-term solution, Olson stressed the need for Congress to carefully monitor taxpayer service trends and make sure the IRS receives the oversight and funding it requires to meet the needs of U.S. taxpayers.

Looking to the future, Olson urged Congress to undertake comprehensive tax reform to reduce the complexity of the Internal Revenue Code and the associated compliance burdens it imposes on taxpayers.

“We do not think it is acceptable for the government to tell millions of taxpayers who seek help each year, in essence, ‘We’re sorry.  You’re on your own,’” the report says.

While “taxpayer service” has been on the advocate’s list of tax problems for several years, Olson bumped it up to  No. 1 in this year’s report. Every year, the National Taxpayer Advocate’s report to Congress identifies at least 20 of the nation’s most serious tax problems. This year’s report identified 23 problems, made dozens of recommendations for administrative change, made 19 recommendations for legislative change, and analyzed the 10 tax issues most frequently litigated in the federal courts.

Among the National Taxpayer Advocate’s concerns and recommendations, the report asks Congress — as it has since 2007 — to enact a Taxpayer Bill of Rights, a list of 10 rights based on principles and modeled on the U.S. Constitution’s Bill of Rights. Among these taxpayers rights are the rights to quality service, to a fair and just tax system, to pay no more than the correct amount of tax, and to challenge the IRS’ position and be heard.

“Taxpayer rights are central to voluntary compliance,” the report says.  “If taxpayers believe they are being treated, or can be treated, in an arbitrary and capricious manner, they will mistrust the system and be less likely to comply of their own volition.  By contrast, taxpayers will be more likely to comply if they have confidence in the fairness and integrity of the system.”

In 2013, the House passed legislation to implement the Taxpayer Bill of Rights, but the Senate did not act. The IRS adopted the Taxpayer Bill of Rights administratively in 2014, but the Taxpayer Advocate stresses in its report that the time is right for taxpayer rights legislation.

Olson urges Congress enact the provisions by statute to assure taxpayers that the rights will become “a permanent part of our tax system.” She added: “Without providing these specific taxpayer protections, the [Taxpayer Bill of Rights] becomes merely a statement of principles, without any teeth to ensure that these fundamental rights are protected on a daily basis, and that taxpayers have remedies and the IRS is held accountable for any violations of these rights.”

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