The Internal Revenue Service is entering tax season “inundated with correspondence, phone calls, and inventories of unresolved prior-year audits and identity theft cases,” with the agency’s problems exacerbated by the longest government shutdown in U.S. history and an antiquated technology system, Nina Olson, the national taxpayer advocate, told Congress on Tuesday.
A day before the shutdown on Dec. 21, the IRS “was already struggling with its inventory of work,” Olson told lawmakers in delivering the IRS 2018 Annual Report.
During 2018, Olson said, “the IRS shuffled resources around to meet the challenge of implementing the new tax law while wrestling with record inventory levels of unresolved cases in its fraud detection programs.”
The annual report staff, Olson stated, “was furloughed, along with most” of her staff. On Jan. 28, “when my office reopened, it was clear that the IRS baseline had changed. The five weeks could not have come at a worse time for the IRS — facing its first filing season implementing a massive new tax law, with a completely restructured tax form.”
Under the tax law, the IRS was directed to replace all the existing Individual Income Tax Return forms — the 1040, 1040A and 1040EZ — with a single new Form 1040.
The new form “was reduced to the size of a postcard, two half pages in length, on which it is estimated approximately 47 million taxpayers (32%) could meet their filing requirements,” Olson said. “By reducing the 1040 to a postcard size, however, this redesign necessitated the creation of an additional six schedules, some containing only three lines of information. Thus, for approximately 70% of taxpayers — nearly 102 million — the six new schedules increase the number of already existing schedules, such as A, B, C, D, or E, that taxpayers must complete.”
Olson said in her 17-page preface that the report identifies “at least 20 of the most serious problems encountered by taxpayers,” and suggests administrative and legislative recommendations to mitigate those problems.