By David S. Hilzenrath
Thursday, January 7, 2010; A12
If you call the Internal Revenue Service for help this tax season and someone actually picks up the phone, consider yourself lucky.
The agency has set a goal of answering only 71 percent of calls to its toll-free help line this year, and those fortunate enough to get through are expected to spend an average of 12 minutes on hold, according to a report released Wednesday by an IRS ombudsman.
"This level of service is unacceptable," National Taxpayer Advocate Nina E. Olson said, calling it the "number one most serious problem for taxpayers."
IRS spokeswoman Michelle Eldridge said the agency "is committed to providing the best possible service to every taxpayer," and she said the agency has been dealing with a rising volume of calls. "The bottom line is we have answered millions more phone calls in the last two years than ever before," Eldridge said.
While crediting the agency with progress on some fronts, such as confronting identity theft, the report accused the IRS of pursuing collection strategies that harm delinquent taxpayers and actually make it harder for the government to collect unpaid taxes.
The report identified a potentially major loophole in an IRS plan announced this week to regulate people who charge money to prepare tax returns, saying the plan applies only to those preparers who must sign the returns. Olson said workers who collect information from taxpayers and draft returns should be regulated even if they are not the ones who ultimately sign the returns on behalf of their firms.
And, in her annual evaluation of the IRS, Olson said that the agency appears to have overstated its success collecting delinquent taxes, a key measure of its performance. In a 2008 report, with no explanation, the IRS said it had collected $32 billion less for the three previous years than it originally had reported -- off by 27 percent. The new numbers were simply marked with an "r" -- "which, as the footnote helpfully explains, means 'revised,' " Wednesday's report to Congress said.
"This failure to highlight and explain revisions of such magnitude is inexcusable and erodes confidence in any data reporting by the IRS," Olson wrote.A list of problems
The Taxpayer Advocate Service, which Olson heads, is a unit within the IRS that is supposed to help taxpayers resolve problems with the agency and recommend improvements in the way the IRS operates.
IRS spokesman Terry Lemons said the agency should have been clearer when it revised the collection numbers, which originally double-counted some collections. The agency is considering expanding its new regulatory plan along the lines Olson suggested, he added. The IRS also took exception to the criticism of its collection strategies.
Listing some of the agency's biggest problems, Olson said the IRS undermines its own cause by automatically filing liens against delinquent taxpayers without finding out whether the taxpayers have any property that could be attached.
The tax liens do little good if the taxpayer has no assets, Olson wrote, and they can damage the taxpayer's credit score and employment prospects. That can make it harder for the taxpayer to earn an income and pay the IRS. It can also increase the odds that the taxpayer will become a drain on the Treasury by ending up on food stamps or unemployment benefits, Olson wrote.
In addition, the IRS forces some delinquent taxpayers into unrealistic payment plans, Olson wrote, because it fails to consider the totality of their financial troubles -- such as credit card debts, school loans and medical bills.
The IRS countered that the agency uses liens to preserve the government's priority over other creditors and that studies have shown the tactic to be effective, according to the report. Olson's estimates of money collected might be conservative because they don't take into account settlements motivated by the threat of a lien, the IRS said.Hung up
Olson focused her strongest criticism on the IRS's chronic difficulty answering the phones, saying unanswered calls frustrate taxpayers, leading some to give up instead of filing returns and leaving others to make errors that the IRS will then be burdened with correcting. In effect, the agency is planning to be unable to answer about three out of every 10 calls, Olson said in a news release.
"That's a pretty incredible indictment" of the agency's attitude toward customer service, said Pete Sepp, vice president of the National Taxpayers Union, an advocacy group, but he added that part of the blame rests with a complex and changing tax code.
As recently as the 2007 fiscal year, the IRS answered more than eight out of 10 customer service calls. The success rate fell to about five out of 10 in fiscal 2008, when the agency was inundated with calls related to economic stimulus payments. In fiscal 2009, which ended Sept. 30, the success rate rebounded to about seven out of 10, just under the goal for the current fiscal year -- and only a hair better than the performance in 1998, when Congress passed a law to reform the agency.
The IRS attributes the problem to a variety of factors, including unusual demand related to federal legislation, the recession and natural disasters such as Hurricane Katrina, according to Wednesday's report. The agency said its phone service has received high marks in customer satisfaction surveys, but Olson said those surveys would not reflect the many callers who hung up while still on hold.
What is the toll-free number to call for assistance?
"You're not going to put it in the story, are you?" IRS spokeswoman Eldridge replied.
That was a joke, her colleague interjected.
When a reporter called 800-829-1040 on Wednesday, it took about two minutes to navigate an automated system and get through to an IRS screener, who asked the topic and said he would transfer the call to the appropriate area. "We estimate your wait time to be between 10 and 15 minutes," a recording said while the call was on hold for a second time. "We apologize for your delay." Actual wait time: about 14 minutes.