Many are surprised to learn there is a Taxpayer Advocate Service (TAS) within the IRS to ensure taxpayers are treated fairly, protect their rights, and recommend agency changes to Congress. Advocates are there to help those with tax problems that cannot be resolved without additional assistance. While all these functions are certainly important, it is the annual report to Congress that provides insight into the challenges and issues faced. In fact, each year the National Taxpayer Advocate is required by law to issue an annual report highlighting the top 10 most serious problems faced when dealing with the IRS. Based on this information, legislators and others can implement changes to improve the customer service experience.
Earlier this month, the 2023 National Taxpayer Advocate Annual Report to Congress included both good and bad news about ongoing service issues. It was noted that the IRS has made significant improvements in the last year. Specifically, the backlog of unprocessed individual returns was virtually eliminated, and telephone service was substantially improved. Yet challenges remain in areas requiring employees to process tax returns and taxpayer correspondence. This is just one of several areas highlighted for improvement. To help clients, prospects, and others, WhippleWood CPAs have provided a summary of the key details below.
Top Problems Impacting Taxpayers
- Processing Delays – As mentioned above ongoing processing delays are frustrating taxpayers. Millions have experienced a significant burden and frustration while waiting for the agency to issue refunds, take necessary actions to comply with tax obligations, or resolve account issues. This is especially prominent with processing Employee Retention Tax Credit (ERTC) claims. Many eligible taxpayers are waiting one year or longer to receive credits or refunds. This creates unnecessary problems not only for taxpayers, but also for the government since the IRS must pay interest on overpayments it does not refund timely.
- Identity Theft – Victims of identity theft face lengthy issues resolution delays and inadequate notices creating significant issues and frustration. It was determined affected individuals are waiting on average 19 months for returns to be processed. This means many victims are waiting more than a year and a half for resolution. This impacts not only the victims but also those with returns flagged for potential identity theft. Not only are inadequate notices a problem but so is identity authentication. Without the latter, the IRS is not allowed to take action.
- Appeals – There is a lack of operational efficiency within the Office of Appeals that has undermined taxpayer trust and prolonged dispute resolution. When unable to resolve issues or question the impartiality of the Office, many are left with no other option than costly litigation adding significant strain. Such issues are detrimental to confidence in the taxpayer system and compromise the right to appeal an IRS decision in an independent forum.
- IRS Transparency – Some still struggle to access information from the IRS including clear and timely guidance. There are often significant delays in issuing important information that can be relied upon. This is needed when determining the status of pending issues, understanding IRS correspondence, and reaching an IRS employee who can resolve problems.
- IRS Hiring and Recruitment – Issues in this area not only impact the quality of taxpayer service but undermine effective administration. Unfortunately, IRS staff levels in the last decade have fallen to lows not experienced since the 1970s. Inadequate staffing has resulted in issues with telephone service, Taxpayer Assistance Centers, and in processing. Even if the agency could attract enough staff there are challenges in onboarding, training, and retaining the needed talent because of outdated technologies and inefficient policies and processes.
Dealing with the IRS on behalf of our clients remains challenging because of the various issues outlined above. While it is encouraging that progress has been made it is clear there are still several significant issues to overcome. If you have questions about the information outlined above or need assistance with a tax or accounting issue, WhippleWood CPAs can help. For additional information call 303-989-7600 or click here to contact us. We look forward to speaking with you soon