At the end of May, we observed in this space that the Hawaii Department of Taxation was having a rough time, only able to answer less than half of the phone calls it received. It turns out, however, that the IRS has had a much rougher time, and Congress, exhibiting unparalleled shortsightedness, is poised to hobble it even further.
According to the National Taxpayer Advocate’s midyear report, during the 2015 filing season the IRS answered only 37 percent of taxpayer calls, down from 71 percent in the 2014 filing season. The hold time for taxpayers who got through averaged 23 minutes, as opposed to 14 minutes last year. The number of times the IRS system simply hung up on a taxpayer on hold was 544,000 in 2014 but went up to 8.8 million this past filing season. The IRS also maintains a Practitioner “Priority” Service line for tax professionals who are trying to assist taxpayers. Those with “priority” weren’t much better off, as the answer rate was 45 percent and the average wait time for the practitioners getting through was 45 minutes.
Part of the problem this season was the first in which the IRS was collecting Obamacare penalties for taxpayers without health insurance, and giving premium tax credits for certain taxpayers who bought it. As with any new law, taxpayers had more questions and needed more help. But the IRS’s funding was down about 17 percent on an inflation-adjusted basis as compared with fiscal 2010, and the House Appropriations Committee’s Financial Services and General Government Subcommittee voted June 11 to slash the IRS’s budget by another $838 million, or 7.7 percent.
The National Society of Accountants, a national organization of tax practitioners that is currently headed by Maui CPA/attorney Marilyn Niwao, is up in arms over these developments.
“The tax system is breaking down, and these funding cuts mandated by Congress are a big part of the problem,” said Niwao. “IRS customer service is at an all-time low, and tax practitioners cannot get timely responses from the IRS for questions we pose on behalf of our clients because the IRS cannot afford the staff it needs to answer the phones.”
Although there is a federal Taxpayer Bill of Rights, “these so-called ‘rights’ are meaningless if a taxpayer’s representative cannot get the information needed from the IRS because Congress has not appropriated sufficient funds to allow the agency to function properly,” Niwao said.
Last-minute tax law changes don’t help either.
“Last year, a tax bill was enacted on Dec. 19, giving no one — not taxpayers, tax return preparers or the IRS — sufficient time to learn about the changes in the tax law, or even get tax forms out in time for the beginning of the tax filing season,” Niwao added.
Although it might seem politically appropriate to punish the IRS in the pocketbook for its handling of such things as Tea Party tax exemption applications, crippling the agency that needs to take in the revenue needed to run government is a sure path to disaster. Short-sighted budget cuts will cost the government far more in lost revenue not only because it will have fewer resources to find the cheaters, but it will also be unable to provide essential help to the vast majority of taxpayers who are trying to be honest but who can and will make mistakes if they don’t know and can’t find the information they need to comply. We need to treat our taxing agencies — including the IRS and the Department of Taxation — like the essential units of government they are, and make sure they get adequate support for the job we are relying on them to do.