National Taxpayer Advocate Nina Olson recently released her FY 2018 Objectives Report to Congress summarizing the recent filing season and future goals to improve Internal Revenue Service (IRS) interactions with US taxpayers.
More than 98% (or $3.3 trillion) of taxes paid in FY 2016 were paid voluntarily. Less than two percent of taxes collected resulted from IRS enforcement activities.
The IRS has increased its “level of service” on their main telephone lines from 72% to 78%. However, the total percentage of calls answered fell from 44% to 40%, with an average “on-hold” waiting time of 42 minutes. The IRS only answered 40% of calls on the “Installment Agreement/Balance Due” special Accounts Management line (a decrease from 76% in FS 2016). The total traffic on the IRS’s website declined by 4.1% between FY 2016 and 2017.
The IRS dedicated only 98 employees to education and outreach for 62 million small business owners and only 365 employees to help roughly 125 million individual taxpayers. Some 76% of audits were conducted without having a dedicated IRS representative responsible for the audit.
Ms. Olson also highlighted specific data and room for improvement in the following areas:
- Use of private debt collectors for tax debts owed by taxpayers in economic hardship situations;
- The IRS certification program related to denial or revocation of passports;
- Transparency (or lack thereof) in the Offshore Voluntary Disclosure Programs;
- Administration of the Earned Income Tax Credit (EITC); and
- The IRS’ heavy reliance upon online account services over non-internet services for taxpayers in need of assistance.
For instance, as of May 17, 2017, the IRS had assigned the debts of approximately 9,600 taxpayers, approximately 5,900 of whom filed a recent return, to its new Private Debt Collection (PDC) program. These taxpayers’ median annual income is $31,689; more than half have incomes below 250 percent of the federal poverty level; and more than a fifth have incomes below the federal poverty level. The IRS is authorized to pay the private debt collectors a fee of up to 25 percent of the amount they collect, and the IRS itself is permitted to retain up to 25 percent of the amount collected. In other words, under this procedure, up to half of the amounts collected for tax debt that would normally go to the public treasury will now be retained by private debt collectors and the IRS.
To read the full National Taxpayer Advocate report, click here.