Underfunded IRS Struggles With Refunds, Answered Questions

Last year was another tough one for the IRS, and perhaps for those anticipating refunds on their taxes.

Burdened with years of budget cuts and a recent increase in workload to implement a new tax law, the IRS struggled to deliver on its mission in the past fiscal year. The annual report from the Office of Taxpayer Advocate found that in the 2019 fiscal year, among other problems, the IRS was late in sending legitimate refunds to many taxpayers and failed to answer the majority of phone calls from taxpayers. The agency also failed to collect billions in unpaid taxes.

The Taxpayer Advocate's role — while inside the IRS — is to ensure sure taxpayer rights are being fairly represented. Among those duties is an annual report to Congress, which lists the most serious problems facing taxpayers. The report is often critical of the agency, and this year's edition released Wednesday was no exception

The Advocate’s report found that the IRS is one of the lowest performing federal agencies in terms of customer service. The agency answered only 29 percent of the 100 million telephone calls it got during the 2019 fiscal year.

That’s a problem not just for those wanting help filing taxes, but also those with more serious issues. People facing enforcement action — such as wage garnishment, bank levies or more — were not always able to reach the IRS to make them aware of hardships, which could potentially free them from those levies.

The IRS has increased the online tools and assistance it provides to taxpayers. At the same time, other forms of live support, such as Taxpayer Assistance Centers,have dwindled. so some people still find it difficult to get the help they need.

The primary problem is that IRS has been struggling with a massive shortage of funding and an increased workload. Its budget has been reduced by about 20% since 2010, after adjusting for inflation. And the number of full-time employees has declined by about 22% during that time. Meanwhile it had to manage a sweeping overhaul of federal tax law. The agency's future looks challenging too: A recent report from the IRS estimates that about 31% of its remaining workforce will retire within the next 5 years.

“The biggest issue the IRS faces in on the resources, being just underfunded for a long time. That shows up in customer service...audits, the IT system is way out of date," said Mark Mazur, director of the nonpartisan Tax Policy Center. “On all fronts they are under-resourced."

rticularly “given the current crossroads at which the IRS finds itself.”