Serious IRS service issues reported to Congress

Increased demands on the IRS have eroded the agency’s ability to meet taxpayer service needs according to National Taxpayer Advocate Nina E. Olson in her annual report to Congress. She expressed serious concern that IRS collection practices are harming financially struggling taxpayers.

While the report praises the IRS for issuing regulations for federal income tax preparers, Olson noted that the burden of the new rules themselves may cause more return preparation businesses to employ nonsigning preparers. 

“We are concerned that excluding nonsigning preparers could create an exception that swallows the rule,” the report states.  The report notes that not all nonsigning preparers need to be covered to protect taxpayers and recommends that the IRS consider extending the new rules to apply to all unenrolled nonsigning preparers.

The report specifies that the IRS’s declining ability to answer telephone calls is the most serious problem facing taxpayers. “The IRS is planning to be unable to answer about three of every 10 calls it receives,” Olson said. “This level of service is unacceptable.”

Olson concluded that many practices have been developed piecemeal and that the IRS lacks an effective overarching strategy to maximize voluntary compliance. 

The report also concludes that IRS collection practices often harm taxpayers without producing revenue. In particular, the report cites IRS lien filing policies as the second most serious problem facing taxpayers. The IRS uses automated systems to file liens against taxpayers in a variety of situations, even when the taxpayer possesses minimal or no property and the lien will do little more than damage the taxpayer’s financial viability and access to credit. 

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