For many years under the Obama administration, Republicans controlling Congress punished the Internal Revenue Service with budget cuts that resulted in horrible service for taxpayers.
Although some service was restored, the Trump administration now plans service cuts so severe that about 40 percent of calls from taxpayers seeking telephone assistance would go unanswered.
IRS acting commissioner David Kautter, more forthright than government officials often are with bad news, predicted a significant decline in telephone service next tax filing season under the budget submitted by his boss, President Trump.
Fortunately for taxpayers, now that Barack Obama is out of office, congressional Republicans are more inclined to fund better service. They penalized the IRS because of accusations the agency unfairly scrutinized conservative nonprofit organizations. But left-leaning organizations also were subjected to close scrutiny, according to a report by the Treasury inspector general for tax administration.
During the last tax filing season, Kautter said the IRS answered four out of five calls — a major improvement over previous years, keeping in mind that service during filing season can be better than during the rest of the year.
But under Trump’s proposed budget, many more callers would be frustrated by bad service, as revealed in this edited exchange between Kautter and Christopher A. Coons (Del.), the ranking Democrat on the Senate Appropriations financial services and general government subcommittee, during a hearing last week.
Kautter: The phone line for taxpayers calling to ask questions of the IRS — individual taxpayers — level of service for that over the last filing season was 80 percent …”
Coons: Do you expect it to continue to be 80 percent this coming filing season?
Kautter: Under the budget that’s been submitted, it would be less than 80 percent.
Coons: How much less than 80 percent?
Kautter: It would probably be in the 60 — 60, 65 percent range.
Coons: So about 40 percent of Americans who call looking for assistance, given a sweeping tax code reform — the biggest in 30 years — about 40 percent wouldn’t get an answer?
Coons cut off Kautter before he could reply, but the answer — yes — is clear from the testimony. Moments earlier, Kautter said that “in putting together the budget, we had to make some choices.”
Customer service lost out.
“It’s troubling that we may see fewer taxpayers who call the IRS for help with their returns next tax season get their calls answered — just as they are dealing with the complicated new federal tax law for the first time,” said Roderick Taylor, a research assistant at the Center on Budget and Policy Priorities. “Congress should fund the IRS adequately so that it can help taxpayers comply with the tax code, enforce the code fairly and credibly, and collect revenue that funds federal programs.”
Taylor is critical of the House Appropriations Committee’s 2019 funding bill for the IRS, pointing to enforcement funding at 2018 levels, which would be down about 25 percent since 2010 in inflation-adjusted dollars. In an article for the progressive-leaning center, Taylor also criticized the committee for not including “President Trump’s proposal for added enforcement funding — $362 million in 2019 and more in later years.”
Budget-makers often must make tough choices, but what makes the IRS different is it collects the money to run almost all of government. Plus, Uncle Sam gets a great deal in return for IRS spending. For every $1 spent, it takes in about $4. The return on enforcement actions is even better: $1 generates about $6.
“I’m particularly concerned about the impact of funding cuts on taxpayer services and IT projects,” Nina Olson, the national taxpayer advocate, said by email. The advocate’s office is an independent organization within the IRS.
“The IRS needs to improve its online, telephone, and in-person services, and it needs to make vast improvements in its technology, which will improve both taxpayer service and compliance activities,” she said. “For example, the IRS has one of the few major call centers in the federal government without customer callback technology when hold times are long.”
While recent service increases were welcome, if short-lived, the IRS continues to suffer from years of stingy funding.
“Since FY 2010, the IRS budget has been reduced by 20 percent on an inflation-adjusted basis, and the IRS workforce has declined by about the same percentage,” Olson told Congress last month. “These reductions have led to significant cuts in taxpayer service levels and have prevented the IRS from deploying new technology that would improve the taxpayer experience.”
The cuts in service flow from cuts to staff. The IRS experienced “a drastic reduction in the number of Customer Service Representatives (CSRs) from 21,057 in 2010 to 9,209 in 2017, a 56% drop,” at the same time the number of individual taxpayers was increasing by 10 million, National Treasury Employees Union President Tony Reardon said in a statement to Congress.
He criticized the administration’s fiscal 2019 budget for proposing “just $11.1 billion in base funding for the IRS, a cut of more than $295 million from the current level,” and reducing the number of full-time equivalent staffing positions by 5,800 from the fiscal 2017 level.
“NTEU knows any further reductions in funding and staffing will further exacerbate the adverse impact previous cuts have had on IRS’s ability to provide taxpayers with the service they need and enforcement of our nation’s tax laws,” Reardon said. “We believe that in order to continue to make improvements in taxpayer services while handling a growing workload and increasing collections, it is imperative to reverse the severe cuts in IRS staffing levels and begin providing adequate resources to meet these challenges.”