Budget cuts, staff reductions, higher workloads and poor training led the IRS to leave nearly 20 million telephone calls from U.S. taxpayers unanswered last fiscal year, says a report submitted to Congress on Wednesday.
"Recent cuts in the IRS budget have also limited the IRS' ability to meet the basic service needs of the taxpaying public, which erodes public confidence and trust in the tax system and may also lead to greater noncompliance," said the report by National Taxpayer Advocate Nina Olson.
Olson leads the Taxpayer Advocate Service, an independent organization within the Internal Revenue Service that was created in 2000. Her congressional report was based on information compiled by the General Accounting Office.
The report follows a year of controversy at the IRS
. A Treasury Department Inspector General's report revealed that tea party, conservative, and religious groups had been singled out for special scrutiny by the IRS on their applications for tax-exempt status from 2010 through the 2012 presidential election.
An IRS agent told congressional investigators later in 2012 that the agency was still targeting the groups, many of whom have sued the IRS and the Obama administration over the scrutiny in federal court.
In addition, the agency was marred by reports of lavish spending,
including $49 million on 225 employee conferences over three years. One session, in August 2010 in Anaheim, Calif., was for about 2,600 workers and cost $4.1 million.
Olson's report says that only 61 percent of the 109 million calls made by Americans to the IRS with tax questions were answered last fiscal year. That's up from 53 percent of 71 million calls in fiscal 2004.
For those taxpayers whose calls got through, they did so after being on hold an average of 17.6 minutes — nearly sixfold from the 2.6 minutes in fiscal 2004.
"At the risk of vast understatement, it is a sad state of affairs when the government writes tax laws as complex as ours, and then is unable to answer any questions beyond 'basic' ones from baffled citizens who are doing their best to comply," Olson said.
But, if you were among the Americans who wrote 8.4 million letters to the IRS last fiscal year, you may have gotten a response — just not a prompt one.
Olson's report found that 53 percent of those letters had not been responded to within the 45-day time established by the IRS. That's also up, by 12 percentage points, from fiscal 2004.
Further, if you decided to go to an IRS walk-in center to get your questions answered, you had fewer centers to choose from — down to 396 last fiscal year from 400 the previous year — and more of them were staffed by only one employee: 65, up from 48 in the earlier fiscal year.
For this tax season, those centers will answer only "basic" questions on tax law — and even those won't get answered after April 15, when the filing season ends.
"In addition, the IRS will discontinue its longstanding practice of preparing tax returns for low-income, elderly, and disabled taxpayers who seek help," Olson's report says.
Overall, the document attributed the decline in service to budget cuts, growing workload, and poor training.
According to the report, the IRS has lost 8 percent of its funding since fiscal 2010 — to around $12 billion last year — while inflation has risen by nearly 6 percent.
"Because of these budget reductions, the IRS has been significantly hampered in its ability to provide 'top-quality service' and maintain effective enforcement programs that minimize noncompliance," the report said.
But more Americans are filing returns, up 11 percent since fiscal 2004, to 146 million last year.
"More tax returns mean more work for the IRS," Olson's report says. "The IRS must answer more taxpayer phone calls, process the additional returns, conduct more compliance checks, and in some cases conduct more audits or take more collection actions."
In addition, the IRS' training budget has been cut from $172 million in fiscal 2010 to $22 million, while the number of employees has dropped from 95,000 full-time workers to 87,000.
"Thus, the IRS not only has fewer employees than four years ago, but those who remain are less equipped to perform their jobs," the report says.
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