Monday marked the beginning of income tax filing season, with every American now facing a deadline to get their papers together and submit forms to the IRS. Biden Administration officials promised in the New York Times that the recent $80 billion in added IRS funding will improve performance from the agency’s appalling service of recent years:
As the filing season begins, the I.R.S. is racing to prepare 5,000 recently hired agents to answer the telephones and respond to questions from taxpayers. It is also rolling out new automated systems and staffing up its brick-and-mortar taxpayer assistance centers.
The upgrades are intended to highlight the initial impact of the money it received through last year’s Inflation Reduction Act legislation and allay fears fanned by Republicans that the funds will be used to ramp up audits on middle-class Americans and small businesses.
“These improvements showcase how we are modernizing both technology and customer service to bring the I.R.S. into the 21st century,” Wally Adeyemo, the deputy Treasury secretary, said during a briefing with reporters.
Adeyemo may be thinking of the wrong century: answering questions in brick-and-mortar offices and on telephones is more like the 20th century. But Adeyemo is right that IRS service needs modernizing. Last year, only 13 percent (22 million out of 173 million) of taxpayer phone calls were answered, up from 11 percent in 2021. Those who got through sat on hold for an average of 29 minutes (a deterioration from 23 minutes in 2021). Paid tax preparers on a priority line get through only 16 percent of the time. Taxpayer letters wait 6 months for an IRS reply. If you are calling to report that your refund has been stolen by an identity thief, you must wait 360 days for a resolution.
The problem, as I highlight in an upcoming Cato Institute study, is that IRS enforcement usually gets the lion’s share of funding, while taxpayer service and new technology gets breadcrumbs. The agency, for example, has 60 different case management systems, which is about 59 too many. The agency’s 5,000 new agents—even if dedicated to customer service—will not be able to answer all 150 million missed calls. A sizeable paper backlog has emerged (15 million unprocessed items as of New Year’s Eve), which at the current pace will take two years to clear.
IRS management has tended to view its role as chasing tax cheats, not helping people navigate the confusing tax code. And most of the $80 billion in new funding is set to go to enforcement, not service. But the IRS still has choices to make to prioritize service, which matters because Americans themselves have no choice but to deal with the sluggish agency. Hopefully, the 21st century IRS will be different than Lily Tomlin’s SNL parody of a 20th century phone company spokesperson: “That’s your problem, isn’t it?… We don’t care. We don’t have to.” Time will tell.