IRS improved customer service this year, says GAO

The Internal Revenue Service improved its customer service this past tax season, according to a new report from the Government Accountability Office, despite the challenges of responding to inquiries about the recently passed tax overhaul.

Andrew Harrer/Bloomberg

The report acknowledged that the IRS faced multiple challenges during the 2018 tax filing season, but the GAO found the IRS improved its customer service this year and met the target dates for processing returns and issuing refunds. That happened despite a system outage on tax filing day that led to some last-minute chaos. The IRS also took steps to handle changes, such as tax rate revisions, under the Tax Cuts and Jobs Act that Congress passed last December.

But that doesn’t mean the IRS can rest on its laurels. Before the 2019 filing season begins, the GAO pointed out the IRS needs to reprogram its computer systems to process tax returns, revise nearly 500 forms and instructions, hire and train employees, and help taxpayers understand the changes when filing taxes in 2019. To help accomplish these tasks, the IRS has set up a central office to coordinate efforts across the agency.

The GAO said for the third year in a row, the IRS has improved its telephone service by answering 80 percent of calls seeking live assistance and reducing wait times to about five minutes, as of the end of the 2018 filing season. That compares to 37.5 percent of calls answered with an average wait time of about 23 minutes during the 2015 filing season.

The generally upbeat findings contrast with a report to Congress released in June by National Taxpayer Advocate Nina Olson (see Taxpayer Advocate concerned about implementing new tax law). Her report said the IRS reported it achieved a “level of service” on its toll-free phone help lines of 80 percent during the 2018 filing season, but contended IRS telephone assistors actually answered only 29 percent of the calls the IRS received.

Taxpayer use of online services also increased, according to the GAO report, including IRS.gov and its online account tool that allows taxpayers to view their balance due. Nevertheless, answering taxpayer correspondence is still a challenge for the agency. The IRS was late responding to approximately 37 percent of correspondence as of the end of the 2018 filing season, compared to around 26 percent at the same time in 2017.

In 2015, the GAO recommended that the Treasury Department include timeliness in handling taxpayer correspondence as part of its performance goals, but as of June 2018 the Treasury has not done so. Overall, despite multiple challenges including mid-filing season changes to tax law and a computer system failure, the GAO said the IRS met its processing targets for individual tax returns.

In 2018, the IRS started taking steps to implement significant tax law changes from the Tax Cuts and Jobs Act, officially known as Public Law 115-97. To implement the changes, the IRS set up a centralized office to coordinate implementation across the agency’s offices and divisions. IRS officials are concerned, though, about the broad scope and complexity of the changes—which will mean extensive changes to tax forms, publications and computer systems—along with the one-year time frame, citing them as key implementation challenges.

While the IRS has taken steps to address these challenges, including development of a project planning tool, the GAO found the new coordination office didn’t initially include the IRS’s Human Capital Office fully, the division responsible for managing the agency’s workforce. After the GAO brought up the matter with IRS officials, representatives from the office now attend weekly coordination meetings discussing and planning the tax law changes. The GAO said involving the office in the discussions will better position the IRS to hire new employees and train them and the existing workforce. It will also help the Human Capital Office better understand training requirements and staffing needs ahead of the 2019 filing season.

The IRS generally concurred with the GAO’s findings but had some concerns with interpreting the percentage of taxpayer correspondence considered “overage,” or more than 45 days old. The GAO clarified its report but noted that while the open inventory of overage correspondence at the end of the fiscal year is not representative of total overage items for the year, the overage rates are relatively consistent throughout the year.

“In the discussion of overage inventory, the report contains a statement about overage inventory which we believe could be unintentionally misleading to a third-party reader,” wrote Kenneth C. Corbin, commissioner of the IRS’s Wage and Investment Division, in response to the report. “The report states that approximately 35 percent of the 17.5 million pieces of correspondence received in fiscal year 2017 was overage. Overage inventory for 2017 was 35 percent of open inventory, which was slightly more than 1.3 million pieces at year-end. Further, of the 1.3 million inventory items at year-end, approximately 514,000 items were taxpayer-initiated correspondence. The remainder consists of internally generated documents associated with account maintenance operations.”