Including an Analysis of the Initial Effects of the Government Shutdown
Taxpayers have ever-changing tax situations year-round. People move, open a business, close a business, get married, get divorced, have children, and experience many other life changes that affect their tax obligations. Forcing taxpayers into a 3.5-month window to ask questions or making it necessary for them to seek advice from a third-party source can be frustrating and costly to the taxpayer and result in eroded trust and confidence in the IRS.
The IRS emphasizes its main toll-free phone line, which includes difficult-to-interpret options and often leads to extended hold times. Even when taxpayers are provided with a specific phone number, most often it is for a group, rather than for an individual employee. These group numbers make it difficult for taxpayers to have a sense of continuity and rapport with the personnel working their cases. Moreover, a lack of ownership on the part of IRS personnel who work these cases can decrease the efficiency and effectiveness of case resolutions and worsen the customer experience.
Several IRS policies affect the ability of taxpayers to timely receive legitimate refunds, including the IRS’s failure to capture necessary information to evaluate the accuracy and efficiency of its non-IDT and IDT refund fraud programs; its past failure to check for third-party information on a daily, versus weekly, basis; and its failure to implement systemic verification capabilities in its fraud detection systems. Simple adjustments such as these could very well prevent taxpayers from being selected into the pre-refund wage verification process or could expedite the release of the return if selected, allowing the IRS to better use its resources to verify returns where there is a substantial potential for fraud.
Although Congress requires the IRS to halt some collection actions, like a levy, if a taxpayer is in economic hardship, the IRS is not proactive in identifying these taxpayers throughout the collection process. This means that the IRS does not have a method to alert collection employees that a taxpayer may be at risk of economic hardship and, when responding to taxpayer inquiries, to ask questions about the taxpayer’s finances to determine an appropriate collection action or alternative. As a result, taxpayers may be lured into entering installment agreements (IAs) they cannot afford, violating their right to be informed, to right to quality service, and right to a fair and just tax system.
As of September 13, 2018, about $5.7 billion in debts of more than 600,000 taxpayers were in the hands of private collection agencies (PCAs). As of September 30, 2018, more than 400,000 taxpayers’ debts were in Private Collection Agency (PCA) inventory with no installment agreement (IA) or payment for more than three months after assignment, and had been in PCA inventory for 244 days on average. Thus, PCA inventory is fast becoming a substitute of the IRS collection queue.
Coverage of the 2018 Annual Report to Congress.