WASHINGTON – The Internal Revenue Service has improved the way it handles taxpayer inquiries after what proved to be a disastrous 2015 tax season, but it still needs to improve processes for working with theft victims and rejecting fraudulent refunds, according to the Government Accountability Office.
Jessica Lucas-Judy, acting director of the GAO’s Strategic Issues division, told a joint meeting of two House Oversight and Government Reform subcommittees that while the federal tax collection agency is providing better telephone service to callers during the 2016 filing season compared to 2015, its overall performance remains low.
“IRS does not make this nor other types of customer service information easily available to taxpayers, such as in an online dashboard,” Lucas-Judy told the subcommittees. “Without easily accessible information, taxpayers are not well informed of what to expect when requesting services from IRS.”
The IRS suffered through one of its worst customer service seasons during the 2015 tax season, with only 37 percent of those calling the agency’s business line actually making contact with a representative.
As a result, Congress made an additional $298 million available to the agency to prepare for the 2016 tax season, with $176 million of that marked for taxpayer services.
Lucas-Judy said the GAO determined that the IRS’s level of telephone service – the percentage of people who want to speak with an assistor and were able to reach one – reached 72 percent during the 2016 filing season, an improvement of 35 percentage points.
“This was the highest level of service reached during this time since 2011,” Lucas-Judy said. “In addition, during the 2016 filing season, taxpayers waited about 11 minutes to speak with an IRS assistor, which was substantially better than IRS expected and an improvement over the close to 23-minute average in the previous filing season.”
This was accomplished despite an increase in volume – from 111.9 million calls during the 2015 season to slightly more than 114 million calls in 2016, a hike of about 2 percent. Full-time equivalents answering phone calls increased from 6,268 to 7,704 – a jump of about 23 percent compared to the prior year.
Total calls where taxpayers abandoned the call, were disconnected, or received a busy signal declined by about 10 percent, from 56.2 million in 2015 to 50.6 million in 2016.
“IRS officials attributed the improvements to additional appropriations from the Congress and user fee funds, which in part allowed for more hiring and use of overtime compared to the prior year,” Lucas-Judy said.
Regardless, the GAO determined that the IRS should seek to improve performance in other areas. Lucas-Judy said potential weaknesses in IRS’s internal control processes “could lead to IRS paying refunds to fraudsters.”
“In discussion groups with us, IRS assistors and managers said some assistors may release refunds even if indicators on the account show that the tax return is under review for IDT (identification), or two returns have been filed for that taxpayer,” she said. “Some participants said assistors answering telephone calls can release these holds because they do not understand the codes on the taxpayer’s account.”
Agency officials said such errors are not widespread and offered data to support the claim. But Lucas-Judy said the GAO uncovered “weaknesses in those data, which IRS officials acknowledged.”
So the GAO recommended that IRS should improve existing data to effectively monitor how often and why IRS staff release refunds before closing an identification or duplicate return case.
Regardless, Lucas-Judy said the GAO determined that the IRS “has improved aspects of service for victims of IDT refund fraud.” However, inefficiencies contribute to delays, and potentially weak internal controls may lead to the release of fraudulent refunds.
“In turn, this limits IRS’s ability to serve taxpayers and protect federal dollars,’’ she said.
Speaking for the IRS, John M. Dalrymple, deputy commissioner for services and enforcement, told the combined panels that the agency is working continually to improve services.
“It is the responsibility of the IRS to ensure that those who are complying and trying to comply have everything they need to fulfill their tax obligations,” Dalrymple said. “It is also imperative that those two categories of taxpayers can feel confident the IRS will pursue those taxpayers who have decided not to comply.”
The IRS, he said, “is dedicated to helping taxpayers meet their tax obligations.”
“The agency spends a significant amount of time and resources each year fulfilling this critical mission, as every inquiry from a taxpayer is important to us, and we know that taxpayers’ overwhelming preference is to not interact with us at all, beyond filing a tax return and getting a refund.”
Dalrymple assured the panels that the 2017 tax season is running smoothly.
As of Feb. 24, the IRS received more than 52.3 million individual returns, on the way to a total of about 152 million. The agency has issued over 41.3 million refunds for more than $127 billion, with the average refund totaling about $3,071.
“I would note this smooth operation of the filing season has been accomplished while using antiquated IT systems, as approximately 60 percent of the agency’s hardware and 28 percent of its software are out of date and in need of an upgrade,” Dalrymple said. “Continuing to rely on such outdated systems is costly and poses a risk of outages or failures.”
Rep. Raja Krishnamoorthi (D-Ill.), ranking member on the House Subcommittee on Health Care, Benefits, and Administrative Rules, noted that while the IRS maintains it is working hard to improve customer service “it can be difficult for many of my constituents to believe in some cases.”
Krishnamoorthi said the agency needs resources to “assist these well-meaning taxpayers” and all of them should have their questions answered in a timely and respectful manner.