TIGTA: IRS coping well with tax season, despite extra challenges
The Internal Revenue Service received approximately 59.2 million tax returns (with 95 percent electronically filed) as of March 1 and issued more than 46 million refunds totaling approximately $142 billion, according to an interim filing season report from the Treasury Inspector General for Tax Administration, as it deals with the first tax season under the Tax Cuts and Jobs Act and continues trying to catch up after the partial government shutdown.
The IRS has faced a host of extra challenges this year in addition to the perennial ones. TIGTA pointed out that the agency is operating under the first major tax reform legislation in more than 30 years, significantly affecting the filing of tax returns this filing season. The Tax Cuts and Jobs Act passed at the end of 2017, but few of the extensive changes showed up during tax season last year. Now taxpayers are filings their returns under a significantly revised Tax Code. On top of that, the IRS is implementing a redesigned Form 1040.
Further adding to the angst of this year’s filing season, there was a partial government shutdown that lasted 35 days, starting on Dec. 22, 2018, and ending Jan. 25, 2019, right before the start of tax season. The Treasury was one of the departments affected by the shutdown, although thousands of IRS employees were required to report to work to get ready for tax season and produce guidance for the new tax law, despite not receiving paychecks.
During the shutdown, many taxpayers weren’t able to reach IRS customer service, a backlog of paper tax returns and taxpayer correspondence developed, and hiring and training of toll-free line customer service representatives was delayed. The IRS had to cancel 16,530 scheduled appointments at its Taxpayer Assistance Centers. It also wasn’t able to staff its toll-free telephone lines to help callers from Dec. 22, 2018, through Jan. 21, 2019, during which time there were approximately 3.8 million attempts to call the agency.
The IRS estimated it received more than 5 million tax forms, correspondence, payments and other items during the shutdown. “Compounding the correspondence backlog is the fact that each year the last two weeks in December and the month of January are traditionally used to shift customer service representatives from answering telephones to working correspondence in an effort to reduce correspondence inventory prior to the customer service representatives having to focus primarily on answering calls during the filing season,” said the report. “This did not occur because the shutdown covered this time frame. However, after the shutdown, IRS management assigned employees from various areas to assist with reducing the inventory.”
The IRS has been catching up with the workload since the government reopened for business. As of Feb. 26, managers have forwarded over 5 million documents downstream for further processing, and as of Feb. 28, there were only around 170,000 documents that had not been sent for processing.
Paper tax returns are still a problem, though. As of March 8, the IRS received more than 3.4 million paper tax returns for processing, and more than 1.6 million (or 47 percent) of them still need to be processed. “In comparison, the ending inventory of paper tax returns for the prior year was almost 1.8 million as of March 9, 2018,” said the report. “The difference represents an 11 percent decrease for this filing season over last year.
The shutdown also led to delays in the training of IRS customer service people. As of Feb. 7, 2019, the IRS hired 2,903 employees to answer tax account calls and resolve tax account issues. “The shutdown resulted in a five-week delay in training for 2,502 of the 2,903 new hires,” said the report. “However, the IRS was able to complete training for 436 of the new hires prior to the President’s Day peak period, leaving a shortage of 2,066 employees who were unable to answer calls from taxpayers.”
Not all good news
Nevertheless, TIGTA found the level of service provided to taxpayers has declined since last year. There was a 57 percent level of service as of Feb. 22, 2019, according to the report, compared to a 77.9 percent level of service reported at the same time last year. That translates into a decrease of 26.8 percent in the level of service. Delays also happened in the hiring and training of employees in the IRS’s Submission Processing function. As of Feb. 28, the Submission Processing function had hired only 2,463 employees (30 percent) of the 8,168 employees it planned to hire for busy season.
To get ready for the 2019 filing season, the IRS also had to update its processes and procedures to cope with the Tax Cuts and Jobs Act and all the changes made to the Form 1040, which was reduced in size, but added six new schedules. The changes included updating 542 tax products and 128 information technology systems, developing and issuing guidance documents, and updating fraud detection systems. The IRS began accepting and processing individual tax returns on Jan. 28.
The IRS has also needed to do extra checks of tax returns claiming refundable tax credits like the Earned Income Tax Credit and the Additional Child Tax Credit because of a congressional mandate. As of Feb. 15, the IRS held 10.7 million tax returns with refunds totaling $57.9 billion with an EITC or ACTC claim as required.
The IRS has also continued to expand its efforts to stop tax refund fraud and identity theft. As of Feb. 23, the IRS reported that it identified 3,529 tax returns with approximately $15.8 million claimed in fraudulent tax refunds and stopped $12.2 million (77.2 percent) in fraudulent refunds from being issued. On top of that, the IRS identified and confirmed 3,741 fraudulent tax returns involving identity theft as of Feb. 28, and identified 20,236 prisoner tax returns for screening as of Feb. 23, 2019.
The IRS has been encouraging taxpayers to take advantage of its self-help options, offering technology such as its IRS2Go mobile app, YouTube channels, and interactive self-help tools on IRS.gov. The IRS also uses social media, like Instagram, Twitter and Facebook to publicize tax advice.
Nevertheless, taxpayers are continuing to use old-fashioned means to contact (or at least try to contact) the IRS by phone. As of March 1, taxpayers made approximately 26.5 million total attempts and 16.1 million net attempts (calls made during business hours) to contact the IRS by calling the various customer service toll-free telephone assistance lines, according to the report. The IRS told TIGTA it answered approximately 9.5 million calls through automation. Actual human beings answered nearly 3.1 million calls and provided a 55.6 percent level of service with a 13-minute average speed of answering the calls.
During fiscal year 2019, the IRS intends to help approximately 2.7 million taxpayers through face-to-face contact at its walk-in Taxpayer Assistance Centers.