Addressing the rock bottom IRS service levels
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Addressing the rock bottom IRS service levels

3 months ago · 3 min read · AICPA Insights Blog

“It’s not how we make mistakes, but how we correct them that defines us.”
— Rachel Wolchin

When IRS service levels plummeted in 2016, the AICPA® initiated an annual member survey to statistically and specifically validate what we were hearing every day. Service levels hit rock bottom that year, yet they inched their way up since then — until now. How is it possible to be below rock bottom again, which is where we find ourselves? It doesn’t take a survey for us to know that there is a problem, but surveys can tell us how big the problem is and guide our advocacy work. In our May 2021 survey, the biggest concerns our members mentioned involve:

  • Inability to connect with the IRS

  • Lack of IRS’ response to written communications

  • Compression of workload due to COVID, laws and regulations

AICPA members said that they felt like the IRS is not on the right path to becoming a modern-functioning, evolutionary and respected federal agency. Members shared their personal experiences with IRS:

  • “Failure to read correspondence, failure to reply to correspondence but no hesitation to continue to send increasingly severe notices to taxpayers.”

  • “Worst service ever. Long waits on the phone. Agents [who] hang up. Mail not opened. Unnecessary IRS notices. LATE, LATE, LATE guidance …”

  • “Was never able to get through to practice hotline. I called over period of [a] couple [of] months on and off. Never could get through and kept saying too busy, try again later.”

IRS Commissioner Charles Rettig testified at a recent Congressional hearing that, in the busiest part of this year’s filing season, IRS call assistors received 1,500 calls a second. That translates into the IRS answering only 2% of all calls. No, that is not a typo. That’s why 69% of our survey respondents indicated that they had received a “courtesy disconnect,” while another 23% of the respondents didn’t have the time to stay on hold for extended periods.

As American blogger and author Rachel Wolchin suggests, the next steps are critical. We know the good men and women of the IRS are doing their best, but the Service had challenges before the pandemic and the last 15 months have been trying — or even devastating — for all of us. So, where do we go from here?

Short-term solutions

The AICPA strongly supports penalty relief measures that are fair, reasonable and practical, and would mitigate the negative effect of the coronavirus on taxpayers and require less contact with the IRS. Such an approach would alleviate the daily struggles that taxpayers, their advisers and the IRS face. Specifically, we urge Treasury and the IRS to:

  • Stop compliance actions until the IRS is prepared to devote the necessary resources for a proper and timely resolution of erroneous notices, missing refunds and other matters. At a minimum, stop automatic collections at least until Aug. 15 (90 days after this year’s May 17 filing deadline).

  • Align requests for account holds with the time it takes the IRS to process any penalty abatement requests.

  • Provide taxpayers with targeted relief from underpayment of estimated tax penalty and the late payment penalty for the 2020 tax year.

  • Offer a COVID-19 reasonable cause relief, similar to the procedures of first-time abatement and generally facilitate the easier adoption of reasonable cause relief.

Long-term solutions

On July 1, 2019, Pub. L. No: 116-25 (referred to as the Taxpayer First Act) became law. The TFA requires the IRS to establish a comprehensive customer service strategy, a comprehensive training strategy and a comprehensive written plan to redesign the organization of the IRS. The IRS submitted its initial report on the act in January 2021 and is in the beginning phase of implementation.

Accountability and modernization

The AICPA has long advocated for a service-oriented, modernized tax administration system. We believe there has to be organizational alignment from Congress, the president and the IRS to determine the level of service and compliance needed for the IRS to be accountable. Resources should then be dedicated to allow the agency to meet its service provision goals. The IRS also requires a modern technological infrastructure. Without it, the agency will continue to be unable to timely and efficiently meet the needs of taxpayers and practitioners.

A practitioner-focused division

The AICPA also has advocated for the IRS to adopt a visionary approach, looking beyond immediate constraints, to develop long-term goals that look toward a 10- or even 15-year horizon. The IRS should also provide flexibility in its design to ensure the agency will continue to evolve.

Most importantly, we recommend a new practitioner-focused office or division as an integral part of the organization’s modernization. Practitioners play a vital role in tax administration. Without a dedicated office or division that can participate in the design of policies and programs affecting key practitioners, the IRS will not successfully leverage the assistance to all taxpayers that could be achieved from the tax preparer community.

At a minimum, such an office should: (1) engage with the tax professional community, (2) ensure practitioner feedback is acted upon through a liaison with all major operating divisions, (3) maintain robust practitioner hotlines and (4) provide an online tax professional account.

I don’t think anyone disagrees that the level of service at the IRS is unacceptable and that horror stories abound. What we have to agree on are the solutions and how quickly they can be implemented. Wolchin also said “[t]he new year means nothing if you’re still in love with your comfort zone.” The IRS has to get out of its comfort zone and start fixing its problems.

Edward S. Karl, CPA, CGMA

Edward S. Karl, CPA, CGMA is Vice President - Taxation of the American Institute of Certified Public Accountants (AICPA). In this position, he is responsible for the review, formulation, and submission to Congress, the Treasury Department, and the Internal Revenue Service of technical and policy recommendations for improvement of the federal tax process. Mr. Karl’s staff serves as the principal liaison for the AICPA with the Internal Revenue Service. He is also significantly involved in tax ethical issues including management of the AICPA’s tax standards, the Statements on Standards for Tax Services. Mr. Karl was previously employed in the tax department of a large, national CPA firm as well as a smaller, local one where he established their tax department. He was a frequent contributor to The Certificate, a publication of the Greater Washington Society of CPAs, of which he was an editor for fifteen years. He has also spoken at numerous tax institutes, state CPA society meetings and IRS programs. Mr. Karl is a member of the AICPA, the Global Accounting Alliance tax directors’ group, the Maryland Association of CPAs, and the Greater Washington Society of CPAs where he has also served on their Federal Tax Committee and Board of Governors.

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