IRS Faces Criticism for Delays and Challenges Despite Billions in Funding
The Internal Revenue Service (IRS) is facing criticism for failing to meet expectations despite receiving billions of dollars in extra funding. A recent report by a federal watchdog highlighted delays and challenges in several areas, including taxpayer identity theft and amended tax return processing. The watchdog’s report acknowledged some improvements made by the IRS but also pointed out significant weaknesses.
One of the prominent issues raised in the report is the unconscionable delays in supporting victims of tax-related identity theft. The IRS has also been burdened with ongoing processing delays that frustrate taxpayers. The report mentioned that the year 2023 was a period of extraordinary transition for the IRS due to the pandemic. However, despite some improvements, challenges persist.
While the IRS managed to eliminate the backlog of paper-filed tax forms and increased its call-answering rate, it still faces hurdles in its processing capabilities. Delays in processing amended tax returns and correspondence remain a significant concern. By October 2023, the backlog of unprocessed amended returns had surged to 1.9 million, quadrupling the level in 2019. Moreover, cases of correspondence had more than doubled, reaching 4.3 million.
One particularly troubling issue is the delays taxpayers face in resolving identity theft issues. As of the end of fiscal year 2023, almost half a million taxpayers were waiting an average of nearly 19 months for the IRS to address their identity theft cases. This is particularly concerning for low-income taxpayers who heavily rely on tax refunds for their living expenses, including those receiving Earned Income Tax Credit (EITC) benefits.
The report labeled these delays as unconscionable and urged the IRS to prioritize quicker resolutions, especially for vulnerable groups. It also highlighted the discrepancy in the level of service provided by the IRS. Although the IRS achieved an 85 percent level of service in its calculations, this figure only accounted for a portion of the calls received, and in reality, IRS employees only answered 29 percent of all calls in the full fiscal year.
The report suggests that the IRS can improve the taxpayer experience by creating robust online accounts. This measure has the potential to be transformative, but it requires significant improvements and better promotion by the IRS. The watchdog also recommended extending first-time penalty abatement for certain filers, promoting universal e-filing, improving the filing experience for paper filers, and providing comprehensive training to IRS employees.
In response to the report, IRS Commissioner Daniel Werfel acknowledged the areas that need improvement and emphasized the importance of adequate IRS resources. The IRS has been allocating additional funding to its enforcement arm, which has stirred controversy and prompted criticism from Republicans. However, Werfel reiterated his call for more money to address the issues highlighted in the report.
Despite facing criticism, the IRS recently announced a record tax collection of $4.9 trillion in the last fiscal year. The agency also plans to enhance tax enforcement using cutting-edge technology, including artificial intelligence. While taxpayers continue to face challenges with the IRS, the agency’s efforts to improve its services and address delays remain ongoing.
In conclusion, the IRS has faced criticism for delays and challenges despite receiving billions in funding. The watchdog report highlighted issues such as taxpayer identity theft and processing delays, urging the IRS to prioritize quicker resolutions. The report also suggested improvements in online accounts, penalty abatement, e-filing, and employee training. The IRS Commissioner acknowledged the report’s findings and emphasized the need for adequate resources. Despite ongoing challenges, the IRS aims to enhance its services and improve taxpayer experiences.
