D. Dowd Muska


Just Send Money -- Don’t Ask for Help

January 21, 2016

A kōan: What’s worse, low-tech or high-tech IRS “customer service”?

We might have an answer soon, as Washington’s tax-collecting monstrosity moves, however belatedly, toward Internet-facilitated communications.

The IRS’s plan for its future, outlined in a document it calls a Concept of Operations (CONOPS), envisions the creation of cyber-accounts that will allow taxpayers to check balances, make payments, and review transaction histories.

But the IRS ombudsman is worried. Earlier this month, in her annual report, National Taxpayer Advocate Nina E. Olson warned that “implicit” in the CONOPS “is an intention on the part of the IRS to substantially reduce telephone and face-to-face interaction with taxpayers. The IRS is hoping that taxpayer interactions … through online accounts will address a high percentage of taxpayer needs. It is also developing plans to enable third parties like tax return preparers and tax software companies to do more to assist taxpayers for whom online accounts are insufficient -- an approach that will increase compliance costs for millions of taxpayers.”

Olson fears the development of a “pay-to-play system.” Taxpayers “sophisticated enough to understand their tax problem or their tax needs” will be able to “navigate the self-help options well enough to protect their rights.” So, too, will filers with “the ability to pay a third party” to wrestle with federal revenucrats. Left “up a creek,” the advocate predicts, will be “those who have neither the expertise, the time, nor the resources to navigate these options.”

While a supporter of “robust online services,” Olson notes that “not every activity can or should be done online.” Congress, she believes, “needs to assert its oversight authority and insist that the IRS come now, sooner not later, to explain the specifics of its future state vision,” and the bureaucracy “should put its plan … out to the public for notice and comment.”

Olson’s concern for Joe and Jane Taxpayer is admirable, and her calls for tough legislative scrutiny and greater public transparency are common-sense recommendations. But her admonition begs a mighty big question. The National Taxpayer Advocate knows better than anyone that the IRS’s non-digital dealings with taxpayers are abysmal.

In December, the Government Accountability Office, answering a congressional request, assessed “IRS’s taxpayer service and individual income tax return processing” for the last tax-filing season. Auditors found a “severe decline in IRS’s customer service in fiscal year 2015.” Correspondence, which is routed “through several steps before it reaches an assistor,” is supposed to be responded to within an interminably inadequate 45 days. That goal failed to be met 20.4 percent of the time in 2010. By 2015, the “overage rate” had climbed to 49.4 percent. Throughout the five-year period, the “average time needed to close cases once they were assigned to an assistor increased from about 35 to 47 days.” Eight of 17 managers who participated in GAO “discussion groups” said that “a common issue was that assistors did not send required correspondence at all.”

In 2015, the number of taxpayers waiting more than 30 minutes at IRS walk-in sites increased by 28 percent. Call for help, and you’ll likely fare no better. “The number of calls from customers seeking to speak to an assistor decreased about 6 percent … between fiscal years 2010 and 2015. However … IRS answered about 50 percent fewer calls from taxpayers seeking an assistor … during the same period, while about 73 percent more calls were abandoned, disconnected by IRS, or met with a busy signal.” Level of service -- “defined as the percentage of people who want to speak with an IRS assistor who were able to reach one” -- tumbled to 38 percent in 2015, down from a surprisingly high 74 percent in 2010. And the average wait time tripled, to more than 30 minutes.

The IRS has an excuse for its incompetence. You guessed it -- budget cuts. While it’s true that the bureaucracy’s spending fell from $12.1 billion in 2010 to $10.9 billion in 2015, automated phone assistance and several web-based tasks (e.g., downloading forms, checking the status of refunds, applying for repayment plans) offered relief. Furthermore, the number of returns filed electronically has risen by a quarter since 2010, while the amount sent through the mail has been halved. The IRS has availed itself of several opportunities to achieve efficiencies. It should have been able to do more -- or, at least the same -- with less.

Instead, taxpayers’ horror continued. And it’s about to migrate into cyberspace.

They don’t care. They don’t have to. They’re the IRS.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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