Last year, one woman told MarketWatch she was on hold for 7 hours, but the IRS says customer service will improve this tax season. And now? A big test lies ahead.
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Last year, tax preparer Kathy Brown called the Internal Revenue Service, and took her daughter to a gymnastics class while her husband stayed on hold, ready to patch in Brown once an employee picked up.
Seven hours later, after sitting through the gymnastics class and returning home, the Warsaw, Ky.-based enrolled agent found her husband still waiting.
Last week, Brown spoke to an IRS staffer less than 30 minutes after dialing the agency. “The phones are just being answered, which is amazing,” said Brown, president of the National Association of Enrolled Agents.
She’s started to notice it, and she’s heard the same the chatter from colleagues. As recently as a month ago “you could call and not get anybody all day.”
This year’s filing season starts on Monday, Jan. 23. That’s when the IRS begins accepting and processing 2022’s income-tax returns.
The agency — buoyed by the start of an extra $80 billion funding influx over a decade — is hoping Brown’s experience is going to be replicated many, many times over.
Now it’s a question what difference all the hiring, planning and technological upgrades will make once the returns start pouring in, along with all the taxpayer inquiries and extra documents that come with it.
“The IRS is expecting more than 168 million individual tax returns, and, as of late December, it still had 1.9 million unprocessed individual returns it received last year.”
The IRS is expecting more than 168 million individual tax returns, and, as of late December, it still had 1.9 million unprocessed individual returns it received last year.
“Our goal this filing season is to effectively and efficiently serve as many taxpayers as possible,” Wally Adeyemo, the Treasury Department’s deputy secretary, told reporters.
The IRS has hired 5,000 new customer-service representatives to work the phones. The aim is to have them in place by President’s Day Weekend in February, when call volumes increase, Adeyemo said. That’s along with other features, like fully staffed in-person taxpayer-assistance centers, and the ability to upload certain forms online instead of mailing them, he said.
Taxpayers’ services should improve this year but it’s a question of by how much and when, said Erin Collins, the national taxpayer advocate for the IRS. “As employees are trained and report for duty, I expect we will start to see improvements in service, probably by the middle of 2023,” she wrote in a January Congressional report.
On the backlog, there’s “light at the end of the tunnel,” she wrote. “I am just not sure how much further we need to travel before we see sunlight.”
Tax season is always a major moment for the tax agency, just as it is for a person’s yearly finances.
“Around two-thirds of taxpayers received a refund last year, averaging almost $3,200, IRS statistics show. But it’s likely many refunds will be smaller this year.”
Around two-thirds of taxpayers received a refund last year, averaging almost $3,200, IRS statistics show. It’s likely many refunds will be smaller this year because pandemic-related boosts to certain tax credits have ended. This is happening while the cost of living stays uncomfortably high and layoffs, especially in the tech sector, stack up and stoke recession worries.
But there’s a lot riding on this season functioning smoother than last year. The IRS will be keen to show the $80 billion in extra funding will be money well spent, and it will be keen to mollify the skeptics.
In August, Congress passed the Inflation Reduction Act, a tax and climate package that devoted $80 billion over a decade for more enforcement and improved operations at the IRS. The act passed without a single Republican vote, as GOP critics fiercely fought the funding.
Earlier this month, the House of Representatives — now with a Republican majority — voted to repeal the extra money. The repeal isn’t expected to pass the Senate and President Joe Biden would wield his veto power.
Even if the IRS has some breathing room for now in the halls of Congress. It’s got to stand up in the court of public opinion — and one visible place to start is the tax agency’s phone service.
Last year, 13% of the 173 million calls to the IRS reached a customer representative and 16% of calls on the tax professional hotline resulted in a connection staff, according to Collins’ report. For those who got through, the average wait time was just under 30 minutes, the data showed.
This year, IRS and Treasury officials want 85% of calls to get to a customer service representative and hold times to average 15 minutes.
A watchdog report said the IRS made “great strides” and hired over 4,700 people through early November. Factoring attrition, the IRS had a net gain of almost 3,900 new customer-service representatives, according to last week’s report from the Treasury Inspector General for Tax Administration. A Treasury official said the latest numbers on gains for customer-service staff after attrition were not immediately available.
The IRS is fully staffing its taxpayer assistance centers, places for in-person tax assistance, Adeyemo said. Of the 361 IRS centers, most of the 35 closed centers had been shuttered for lack of available staff, the Treasury watchdog report said.
More paperwork will be scanned and replies to more notices can be done online, all to quicken processing times, Adeyemo said. In a matter of days, people will be able to upload substantiating documentation and replies for 10 types of notices, he noted.
The list includes notices connected to the child tax credit, the earned income tax credit and notices of holds on a refund pending review, according to the recent Treasury Department watchdog report. (Even with the extra capacity to scan paper documents, it’s best to file a return electronically with a direct deposit to get a refund as soon as possible.)
Brown says the first real tests will come next month, when clients’ tax paperwork and questions begin rolling in, and returns really start getting filed. She’s hopeful, but holding her breath that all the new hires can be sufficiently trained in time.
“I have a good feeling about the changes the IRS is making,” she said. “It’s got to be better. It can’t get any worse.”
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