In addition to being unable to answer the phone, the IRS will be unable to provide answers to anything but “basic” tax-law questions. After the filing season, it will answer no tax-law questions at all. And the agency has halted its longstanding practice of preparing returns for elderly, disabled and low-income taxpayers.
“The requirement to file a tax return and pay taxes is generally the most significant burden a government imposes on its citizens,” Olson’s report says. “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.’”
In a separate email, IRS Commissioner John Koskinen warned Tuesday that budget cuts could delay refunds for paper filers by more than a week this filing season and force a total agency shutdown later this year, resulting in a two-day furlough for its roughly 80,000 workers.
Moreover, reductions in enforcement activities could wipe out any savings, Koskinen wrote, with the government losing $2 billion in taxes that would otherwise have been collected.
“This year, we are looking at a situation where realistically we have no choice but to do less with less,” Koskinen wrote, adding that the reductions in service “are unacceptable to all of us.”
Olson, who serves as an official watchdog over the IRS, has long complained about the agency’s diminishing ability to respond to taxpayers’ needs as political battles over the national debt have led to ever-deeper cuts in agency funding. This year, however, Olson ranked taxpayer service first on her “most serious problems” list, under the heading: “Taxpayer Service Has Reached Unacceptably Low Levels and Is Getting Worse.”
The long slide is vividly illustrated by a single metric: The agency’s ability to answer the phone.
In 2004, a high water mark, the IRS answered 87 percent of calls and taxpayers had to wait on hold only about 2 and a half minutes, the report says. In the teeth of the financial crisis, in 2009, the IRS was still answering 70 percent of its calls after average wait times of about 9 minutes.
Since Republicans took control of the House in 2011 and began demanding sharp cuts at agencies other than the Pentagon, however, IRS customer service has deteriorated rapidly. Answered calls fell to 61 percent in 2013 and 64 percent last year, a slight uptick due primarily to lower call volume, the report says.
Time on hold, meanwhile, skyrocketed to nearly 20 minutes in 2014, and is projected to exceed half an hour during the coming filing season.
Olson’s report blames this decline in performance on “a combination of more work and reduced resources.” The IRS handles nearly 160 million tax returns each year and more than 100 million phone calls, interacting with more members of the public than any other federal agency. This year, new duties related to policing tax subsidies under President Obama’s Affordable Care Act will further add to the agency’s workload.
At the same time, Congress has cut IRS funding from $12.1 billion in 2010 to $10.9 billion this year – a reduction of nearly 10 percent in nominal terms and nearly 18 percent after accounting for inflation. In turn, the number of IRS employees has been cut from nearly 95,000 to fewer than 83,000 last year. And Koskinen projects the loss of an additional 3,000 to 4,000 full-time workers in 2015.
“There is a close and obvious connection between the number of IRS employees and the IRS’s ability to meet taxpayer needs,” Olson’s report says. “While the National Taxpayer Advocate believes the IRS can operate more effectively and efficiently in certain areas, 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.”
Olson notes that the IRS has deepened its problems by generating “mistrust" on Capitol Hill through "significant management mistakes,” including a scandal over the systematic targeting of conservative groups seeking tax-exempt status. But she chides Republican lawmakers for blowing the scandal out of proportion and neglecting the need to finance critical services.
"The IRS will never be a beloved federal agency, because it is the face of the government's power to tax and collect.... But casting the entire agency and all its employees as an out-of-control agency in response to the actions of a few, no matter how deplorable those actions maybe , is harmful to taxpayers and to tax compliance," Olson wrote.
"We need to recognize that the IRS and its employees play a vital role in the economic welfare of this country. And we need to find a way to support the agency even as we hold it accountable for what is often a thankless task."