TAXPAYER SERVICE REVIEW

July 14, 2017 - Douglas Myser

Taxpayer service review. The IRS Taxpayer Advocate Service will address during the upcoming fiscal year, and contains the IRS's responses to each of the 93 administrative recommendations the Advocate made in her 2016 Annual Report to Congress. Taxpayer service review.

In her preface to the report, Ms. Olson praises the IRS for running a generally successful filing season, including reducing the incidence of identity theft, implementing new accelerated Form W-2 reporting requirements, and matching Forms W-2 against tax returns claiming refunds. But Ms. Olson says taxpayers who require assistance from the IRS are continuing to face significant challenges obtaining it. She attributes part of the problem to resource constraints, saying that IRS funding has been reduced by nearly 20 percent since fiscal year 2010, after adjusting for inflation.

While taxpayer service and enforcement activities are both essential for effective tax administration, Ms. Olson says taxpayer service requires more emphasis than they are currently receiving. She points out that more than 60 percent of the IRS budget is allocated to enforcement activities while only about 4 percent is allocated for taxpayer outreach and education. The report elaborates on taxpayer service limitations, particularly involving outreach and education. Ms. Olson recommends that the IRS expand its outreach and education activities and improve its telephone service and that Congress provide the IRS with sufficient funding to do so.

The report says the IRS delivered a generally successful filing season in 2017. The IRS processed nearly 130 million returns, about 90 percent of which were filed electronically. Seventy five percent of the returns resulted in refunds, and the average refund amount was $2,783. The IRS successfully implemented several provisions of the Protecting Americans from Tax Hikes Act of 2015, which directed the IRS to delay paying refunds until February 15 to taxpayers claiming either the Earned Income Credit or the Additional Child Tax Credit and required the IRS to deactivate Individual Taxpayer Identification Numbers based on age of issuance and non-use.

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