Disruptions from last month's partial government shutdown caused a "shocking" deterioration in the IRS' telephone help for taxpayers in the first week of the filing season, the agency's watchdog said in a report released Tuesday.
In the week of Jan. 28, the official start of the tax season, Internal Revenue Service staffers answered only 48 percent of calls seeking help in filing returns, with an average wait time of 17 minutes, the report from the office of the National Taxpayer Advocate said. That compares with 86 percent of calls answered, and an average wait of 4 minutes, at the same time last year.
In addition, 93 percent of taxpayers who phoned during the last week in January to arrange installment tax payments were unable to speak with an assistant.
The difference between the two years "for levels of service and wait times for phone lines ... is shocking," the advocate, Nina Olson, wrote in her annual report to Congress. "These numbers translate into real harm to real taxpayers. The IRS will be facing tough decisions in light of the shutdown's impact."
The report flagged other problems at an agency that was already straining, even before the shutdown, from the burden of a complex new tax law, inadequate funding and antiquated computer systems. The IRS' workforce faced a huge backlog — including 5 million pieces of mail to process —when it returned to full strength Jan. 28 after the 35-day partial shutdown, which had furloughed most of its employees.
During the shutdown, the Trump administration made money available to pay hundreds of billions in refunds and ordered nearly 60 percent of the IRS workforce back to work without pay to handle tax returns and questions. Yet fewer than half the recalled employees had returned to their jobs by the time the shutdown had ended, according to congressional and government aides.
The disruption raised the possibility of delayed processing of returns and refunds — an annual check that about three-quarters of U.S. taxpayers typically count on. Lower-income households, especially, depend on refunds as their biggest cash infusion of the year.
The IRS has said that when taxpayers file electronically and use direct deposit to their bank accounts, roughly nine out of 10 refunds will continue to be issued this year in fewer than 21 days.
Still, anger is being vented on social media from people who have already filed their taxes and received smaller-than-expected refunds. President Donald Trump had pledged that under his tax-cut law, families would receive an average $4,000 tax cut. Most taxpayers did receive a tax cut. But because of how some workers had adjusted the amount of money withheld from their paychecks, to account for the complex tax changes, their refund has ended up smaller than they had anticipated.
The average refund paid in the first week of the filing season, which ended Feb. 1, was $1,865 — down 8.4 percent from $2,035 in the same week last year — according to the IRS. In her report, Olson did not address how the tax law or the shutdown might have affected refunds. But during the early part of the shutdown, no IRS employees were authorized to answer the phone lines, issue refunds, establish installment agreements with taxpayers or review pending agency actions.
Olson's report found that the IRS' systems for detecting fraud in tax returns are hobbled by high rates of false positives and long processing times. That "continues to plague the IRS and harm legitimate taxpayers," it says.
The report also found that:
- Taxpayers have difficulty navigating the IRS, reaching the right personnel to resolve their issues and holding IRS employees accountable.
- The use of the IRS' Free File, an electronic tax filing program in partnership with 12 private software providers, has steadily declined in recent years. The agency isn't adequately overseeing and testing the program to understand why taxpayers aren't using it and how it could be improved.
- The IRS lacks a coordinated approach to overseeing professional tax preparers.
- The agency's expanding use of private debt collectors continues to burden taxpayers who are likely suffering economic hardship.