National Taxpayer Advocate Erin Collins’s mid-year report to Congress states that the recent filing season generally ran smoothly this year, but it also identifies continuing delays and urges the IRS to make better service a priority, the IRS announced.
The report identifies certain key taxpayer challenges, such as delays in issuing refunds to identity theft victims; misleading telephone measures that lead to poor resource allocation decisions; and delays in processing Employee Retention Credit (ERC) claims.
“For most taxpayers, the filing season is the only time they interact with the IRS,” wrote Collins. “After several years of abysmal taxpayer service during the COVID-19 pandemic, the IRS has now delivered two filing seasons that demonstrate the agency has restored service to pre-pandemic levels and has improved in most, but not all, areas of service. This is excellent news for most taxpayers.”
Collins called the ID theft refund delays “unconscionable” earlier this month, and she reiterated that concern in this report. “Delays of nearly two years make a mockery of the right to quality service in the Taxpayer Bill of Rights,” Collins wrote. “The IRS must prioritize assistance for these victims and fix this problem quickly.”
As of April 2024, the IRS was taking more than 22 months to resolve identity theft victims’ assistance cases, plus several weeks to issue refunds, and it had approximately 500,000 unresolved cases in its inventory, the report noted.
While praising the Treasury Department and the IRS for improved telephone service, the report criticized its reliance on “Accounts Management (AM) Customer Service Representative Level of Service (LOS)” as the agency’s principal and most widely cited measure of taxpayer service. For the past two filing seasons, the Treasury and IRS set a goal of achieving an LOS of at least 85 percent, achieving an LOS of 88 percent in this filing season.
But Collins opined that “the AM LOS measure has taken on outsized importance in recent years, as the IRS has allocated resources to hit ambitious but arbitrary goals, … causing the IRS to prioritize the wrong work, and it needs to be replaced.” She pointed out that, while the 88 percent figure gives the impression that IRS employees answered 88 percent of taxpayer calls, they answered only 31 percent of taxpayer calls.
“The IRS classifies many of its telephone lines as “Accounts Management” (AM) lines, but it excludes many of its telephone lines from the AM calculation,” she wrote. “In contrast to the LOS of 88 percent on the AM lines, the LOS on non-AM lines was 36 percent during the filing season.”
Millions of callers to non-AM telephone lines received substantially lower levels of service, including those who called the Installment Agreement/Balance Due line to make payment arrangements or otherwise resolve their tax debts; those who called the Taxpayer Protection Program telephone line because IRS filters had suspended the processing of their returns on suspicion of identity theft; and those who called the IRS’s Automated Collection System telephone line after receiving a collection notice and who may have needed urgent help getting a levy released to alleviate an economic hardship.
Delays in processing Employee Retention Credit (ERC) claims are burdening businesses, the report found, saying that “many [businesses] have already waited a year or longer for the IRS to determine if their claim is valid.”
Collins planned to work with the IRS leadership in the coming weeks to try to accelerate the processing of eligible claims, including several thousand cases pending in Taxpayer Advocate Service (TAS).
Collins addressed how the IRS has used Inflation Reduction Act funding to improve the taxpayer experience, noting improvements in taxpayer services and citing numerous examples of critical technology needs, including enhanced online taxpayer accounts, digital scanning of paper-filed tax returns, more detailed and up-to-date information on the Where’s My Refund? and Where’s My Amended Return? tools, replacement of the agency’s roughly 60 case management systems that don’t communicate with each other with an integrated system, and replacement of core technology systems that still run on Assembly Language Code and COBOL.
“While opinions about the large boost in Enforcement funding have varied, I have yet to hear a Member of Congress oppose the additional funding provided for Taxpayer Services or IT modernization,” Collins wrote.
The TAS’s objectives for fiscal year 2025 include modernizing IRS processing to increase efficiency and improve the taxpayer experience; improving IRS employee hiring, recruitment, retention and training processes; and enhancing IRS transparency by improving applicable technology, sufficiently explaining modernization progress, and providing straightforward guidance on tax law.
“The National Taxpayer Advocate made 78 administrative recommendations in her 2023 year-end report and then submitted them to the Commissioner for response,” the IRS responded. “The IRS has agreed to implement 62 (or 79 percent) of the recommendations in full or in part.”