National Taxpayer Advocate Nina Olson, who will retire on July 31, 2019, recently released her final report to Congress, summarizing the 2019 filing season and identifying objectives for FY 2020. Top on her list of goals is the improvement of services to taxpayers, with a move towards a "taxpayer-centric strategy" designed to reduce anxiety and increase trust in our federal tax system.
During the 2019 filing season, which included the 35-day government shutdown, tax reform changes, and a new Form 1040, the Internal Revenue Service (IRS) was largely successful processing returns and issuing timely refunds, Olson reports. However, only 23 percent of taxpayers who called the IRS for assistance were able to speak to a representative. The average wait time was 41 minutes. Other statistics the IRS tracks related to levels of service use a flawed methodology that shows better performance than the actual taxpayer experience.
The IRS also has room to improve with respect to how it treats financially vulnerable taxpayers. About 40 percent of taxpayers who entered into streamlined installment agreements in FY 2018 had incomes at or below their "Allowable Living Expenses." Of those taxpayers, 39 percent have defaulted on their agreements, which is approximately seven times the default rate for taxpayers with higher incomes.
"[T]he IRS collection system favors knowledgeable taxpayers who understand how to request collection alternatives and, at least in relative terms, discriminates against taxpayers who don't have that knowledge," Ms. Olson wrote. "That is not the way a fair tax system should work, and it needs to change."
The Taxpayer Advocate Service (TAS) is working on an "electronic roadmap" to help taxpayers understand notices they receive, related rights, next steps, and resources to get assistance. It also developed a "Taxpayer Anxiety Index" to help the IRS determine the processes in which personal contact is most beneficial, so the IRS can better allocate its limited resources.
To read Ms. Olson's report in full, click here. Two additional volumes of this report will be released in July 2019, including a comprehensive assessment of the Earned Income Tax Credit.