Like many businesses and government agencies, the Internal Revenue Service (IRS) has a proverbial "help wanted" sign in the window. Fewer than two hundred people applied when the agency tried to hire 5,000 more people for this tax season, according to CBS News.
Some lawmakers have warned that the tax agency is currently understaffed and underfunded. The result has been unprocessed returns, unanswered correspondence, and huge backlogs of other paperwork.
The problem is so bad that the IRS was described as "drowning in paper" by Taxpayer Advocate Erin Collins in a January report to lawmakers that described the crisis the agency is facing.
Collins testified to the House Ways & Means Committee earlier this week. She said that the number one priority at the agency has been to clean up the backlog of unprocessed tax returns.
"When I see the backlog, I don't see piles of papers but instead I see people, families and businesses that need their returns processed," Collins told lawmakers.
She also warned that the IRS needs to modernize its information technology (IT) systems, but said that staffing remains a serious issue.
"TAS (Taxpayer Advocate Services) does not have the staffing to accept more cases, and the IRS is so buried in backlogged returns that it cannot give priority to the returns of taxpayers who come to TAS without slowing down the processing of all other returns," Collins explained.
Main Challenges and Recommendations
Among the main taxpayer challenges this year are the significant delays in receiving a tax refund due to the unprecedented IRS backlogs, and that it is increasingly difficult to reach the IRS by phone. Taxpayers have also found that the online tools – including the “Where's My Refund?” and “Where's My Amended Return?” – often could not answer those questions.
Collins offered some recommendations to lawmakers, including an automated system to review amended tax returns and something as simple as a "customer callback" system on all telephone lines, so that taxpayers and tax professionals aren't forced to wait on hold and can receive a call when the next customer service representative is available.
She also offered legislative recommendations, which included for Congress to provide the IRS with additional sustained, multi-year funding at levels sufficient to meet taxpayer needs; and to refrain from making changes to the Internal Revenue Code just before, and particularly during, the filing season.
“Last-minute tax law changes create administrability challenges for the IRS and tax software companies, and confusion for taxpayers and tax return preparers,” said Collins. “When a law is changed, the IRS must re-program its processing systems to accommodate the change, sometimes leading to delays in the start of the filing season, and tax software companies must update their software so taxpayers and tax return preparers get the right results.”
Collins also emphasized that investment in people and technology is more necessary than ever.
“The longer-term solution should involve strengthening both human and IT resources,” she said in her closing remarks. “The IRS needs to rebuild and modernize its foundation to enable it to make good on its stated mission to ‘[p]rovide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness for all.’ In this statement, I have outlined my priority recommendations to help the IRS do a better job of accomplishing its mission.”
The situation may be bad at the IRS, but that doesn't mean that now is the time to play fast and loose when filing a tax return. The tax agency did hire hundreds of new enforcement auditors last year who recently completed their training. In December, the IRS also posted new job openings as it seeks to hire two hundred more tax attorneys for this year.
Many of those lawyers will focus on tax shelters, syndicated conservation easement deals, and micro captive arrangements.
Peter Suciu is a Michigan-based writer who has contributed to more than four dozen magazines, newspapers and websites. He regularly writes about military small arms, and is the author of several books on military headgear including A Gallery of Military Headdress, which is available on Amazon.com.