The Internal Revenue Service is getting set for the opening of the 2016 individual income tax-filing season on January 19, promising improved taxpayer service and security, and a functioning Practitioner Priority Line, thanks to a funding boost from Congress.
“The increase in our budget is an important development for the IRS and for taxpayers, and is the first time in six years that we received any significant additional funding,” said IRS Commissioner John Koskinen during a conference call with reporters Thursday. “While this is very good news for the IRS and its employees, it’s important to put this funding in perspective. The $290 million will help us address three areas of high priority for us: taxpayer service, identity theft and cybersecurity.”
Although the extra funding is still below the IRS’s budget request of $700 million, and the IRS remains funded at a level that remains $900 million below where it was six years ago, Koskinen said the additional funding would allow the agency to improve service to taxpayers.
“We will be able to hire up to 1,000 additional customer service representatives to answer our toll-free help lines this filing season,” he said. “With this and other resources we are applying in this area, we expect to improve on our phone service levels from last year. But I do want to caution that, even with these additional resources, we do expect our toll-free taxpayer help lines to be extremely busy again this filing season. There will be wait times before people can get through, since the additional funding is still less than needed.”
A report released Thursday by the Government Accountability Office found the IRS provided the lowest level of telephone service in fiscal year 2015 compared to prior years. Only 38 percent of callers who wanted to speak with an IRS assistor were able to reach one. The lower level of service occurred despite lower demand from callers seeking live assistance, which has fallen by 6 percent since 2010 to about 51 million callers in 2015. Over the same period, average wait times have almost tripled to over 30 minutes.
Koskinen said he hopes to improve the rate of callers who get through to the IRS this tax season to 60 percent and to reduce wait times to under 20 minutes. He also expects to make the dedicated phone line for tax practitioners more functional. “I’m pretty confident our Practitioner Priority Line will actually work this year,” he said.
Taxpayers and tax preparers will have several extra days to file their tax returns this year. Taxpayers have until Monday, April 18, to file their 2015 tax returns and pay any tax due because of the Emancipation Day holiday in Washington, D.C., falling on Friday, April 15. Taxpayers in Maine and Massachusetts will have until Tuesday, April 19, because of Patriot’s Day observances on April 18.
The IRS expects more than 70 percent of taxpayers to again receive tax refunds this year. Last year, the IRS issued 109 million refunds, with an average refund of $2,797. The IRS is anticipating more than 150 million tax returns to be filed this year.
Koskinen noted that the IRS spent a great deal of time last year making sure the tax-filing experience is more safe and secure for taxpayers. “As part of our Security Summit initiative, the IRS has been working closely with the tax industry and state revenue departments to provide taxpayers with stronger protections against identity theft during the tax filing season,” he said. “Because of these new protections, taxpayers may notice some minor—but important—changes when they file their returns. For example, for people using tax software, there will be new sign-in requirements for people accessing their accounts. Many other new safeguards we’ve put in place will be invisible to taxpayers. But they are all invaluable to us, because they will help us do a better job of protecting everyone at tax time—both at the federal and state levels as well as those using tax software.”
The extra steps should help protect taxpayers while providing new protections against fraudulent refunds. Even with the new protections, Koskinen added, the IRS still expects to process nine out of 10 federal tax refunds within 21 days. “As in the past, the best way for you to ensure a quick refund is to e-file your return,” he said. “For taxpayers filing paper returns, refunds can take four to six weeks.”
The extra security steps should not be an obstacle for tax professionals, according to Koskinen. “We actually have designed this with the tax preparer community,” he said in response to a question from Accounting Today. “In fact, their request at the start was that we have a uniform set of standards, and I said that was fine. We’re the only ones who can set that standard. But I said we need to set it in a way that works for you and is comfortable. So it’s designed in effect by this partnership of the major preparers, including some of the small to medium size preparers. They’re all comfortable that, for the taxpayers and the preparers, the additional security and passwords will be noticeable but not very inconvenient for anyone. It won’t take a significant amount of time. It will simply make the system more secure.”
Koskinen noted that an important change for the upcoming filing season involves the new savings option being offered by the Treasury Department, called “myRA,” short for “my Retirement Account.”
“These accounts can be set up by people who don’t have access to a retirement plan through their employer,” said Koskinen. “One of the ways people can contribute to a myRA account is by directing all or a portion of their federal tax refund to the account. The myRA account is an important new tool for people to use to increase savings, and the IRS is pleased to support it.”
Affordable Care Act Changes
Another important change this year involves the Affordable Care Act, although like last year, most people will simply need to check a box to indicate they had health coverage for the entire year.
“This year, there is a new requirement that health care coverage providers furnish taxpayers with a form listing those who are covered,” said Koskinen. “Taxpayers may have heard the IRS has extended the deadline to provide these forms. But I want to be clear on this. You don’t have to wait for these forms in order to file your tax return. You can rely on other information to determine your health coverage just as you did when you filed last year.”
However, he said he had an important message for people who received advance payments of the premium tax credit in 2015. “They will need information from the Form 1095-A that they receive from the Health Insurance Marketplace, so those people need to wait for the Form 1095-A before filing their tax return,” said Koskinen. “The form will help them reconcile their advance payments and file an accurate return, which is very important. And it is important for everyone who received advance payments of the premium tax credit to reconcile those payments on Form 8962 and to include the 8962 with their return. Those who fail to do so may not be eligible for advance payments of the premium tax credit or cost-sharing reductions to help pay for Marketplace insurance coverage.”
Get Transcript Application
After the breach last year of the IRS’s online Get Transcript application by hackers, Koskinen cautioned that the app still does not allow taxpayers to access their transcripts directly online. Instead, they can only order copies of the transcript online, which will be mailed by the IRS to the address on record. Therefore, he encouraged taxpayers to plan for a wait of up to 10 days.
“The message is: plan ahead,” said Koskinen. “The best way to obtain a transcript is to order it online using the Get Transcript application on IRS.gov. The IRS will mail the transcript to your address of record, and you should receive it five to 10 days after we receive the online request. Taxpayers who ordered transcripts in the last year or two may remember being able to use the Get Transcript tool to immediately view and print a copy of their transcript. We disabled that part of the application last year in order to enhance identity protection security features. We hope to begin offering online viewing and printing of transcripts again in the near future, once those new security protections are tested and in place.”
Congress is pressing the IRS to improve its level of service this tax season. In response to the GAO report on declines in taxpayer service, Senate Finance Committee ranking member Ron Wyden, D-Ore., said, “Honest taxpayers lose when Congress asks the IRS to do more with less. As we head into a new filing season, working families have enough headaches to deal with just trying to navigate our complex tax system and file their returns correctly and on time. They shouldn’t also be left hanging on the line as the IRS shifts decreasing resources and attention away from critical taxpayer support to deal with changing mandates from Congress. Effectively serving taxpayers is priority one. The IRS needs to outline a clear strategy to get this done and be in a position to deliver, and Congress needs to provide the resources for the IRS to meet the needs of our taxpayers.”
House Ways and Means Committee chairman Kevin Brady, R-Texas, also encouraged the IRS to do better this tax season. “Reaching an IRS employee often seems as unlikely as winning Powerball,” Brady said in a statement. “GAO has confirmed once again that few Americans are able to actually reach an employee and get the help they need. It is clear that the IRS needs to reexamine its priorities. Our committee will hold the IRS accountable as it begins the 2016 filing season.”