Is There Any Hope of Making Tax Season Less Chaotic for Americans?

Is There Any Hope of Making Tax Season Less Chaotic for Americans?

A Treasury official recently said that if the Internal Revenue Service had adequate funding, it could potentially mirror the streamlined tax process seen in other countries.

There’s no question that tax season can be an incredible pain for millions of Americans.

In fact, Natasha Sarin, the Treasury Department’s counselor for tax policy and implementation, recently noted in a blog post that “it takes the average American 13 hours to file.”

However, she added that if the Internal Revenue Service (IRS) had adequate funding, it could potentially mirror the streamlined process seen in other countries. For example, she said that the average Estonian spends only five minutes doing taxes, while in Sweden, many taxpayers just have to reply “yes” to a text message to confirm their taxes.

“When COVID complicated filing, Norway and Singapore expended significant resources to expand chat and video channels and extend call center operating hours to make the agency more accessible during the filing season,” Sarin writes.

“The OECD reports that 75 percent of tax administrators around the world use machine learning and artificial intelligence to reduce the need for human intervention in the filing process. Meanwhile, at the IRS, campus employees have a high order need for red pens so that clerks can circle line items on paper returns to transcribe by hand,” she continues.

Per Insider, President Joe Biden and most Democrats have been pushing for an $80 billion investment over the next decade to rebuild the tax agency’s capabilities, but that ambitious House-approved effort has stalled out in the Senate.

“Today’s [Tax Day] deadline is an inflection point in what has been the agency’s most challenging filing season in recent history,” Sarin says. “This is the byproduct of chronic underfunding that has starved the IRS of the tools it needs to serve the American people, coupled with a historic pandemic that introduced new responsibilities alongside mammoth challenges.” 

Due to the lack of funds and the pandemic, the IRS started this tax season with more than twenty million unprocessed personal returns and correspondence.

“This is, in part, because the IRS’s technology is antiquated—in significant ways, the IRS is still a paper-based agency, with a heavy reliance on manual processing. … The IRS has a plan in place to get through its backlog of unprocessed returns this year. But so long as funding remains insufficient, the system will be at risk of these kinds of failures and Americans won’t have the kind of service they deserve,” Sarin explains.

“Throughout the pandemic, IRS employees have been on the frontlines, literally putting their lives at risk to keep our tax system functioning. And they’ve done so while massively understaffed: the agency’s budget is so depleted that the workforce is at 1970s levels, 20 percent of employees are eligible to retire, and hiring new workers is a months-long process where uncertain funding means that the agency must assume risk to build its workforce, as vital funding to support them in the years ahead is far from guaranteed,” she continues.

Last month, IRS Commissioner Chuck Rettig told the House Ways and Means Committee that he expects the agency to make solid headway on the backlog by the end of this year.

“Barring any unforeseen circumstances, if the world stays as it is today, we will be what we call ‘healthy’ by the end of calendar year 2022, and enter the 2023 filing season with normal inventories,” he said.

Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters.