IRS and Tax Return Season

IRS management has tended to view its role as chasing tax cheats, not helping people navigate the confusing tax code.

Monday marked the beginning of tax filing season, with every American now facing a deadline to gather their documents and submit forms to the Internal Revenue Service. Biden Administration officials indicated in the New York Times that the recent $80 billion in additional IRS funds will enhance the agency's performance after years of abysmal service:

As the filing season begins, the I.R.S. is racing to prepare 5,000 recently hired agents to answer the telephones and respond to questions from taxpayers. It is also rolling out new automated systems and staffing up its brick‐​and‐​mortar taxpayer assistance centers.
The upgrades are intended to highlight the initial impact of the money it received through last year’s Inflation Reduction Act legislation and allay fears fanned by Republicans that the funds will be used to ramp up audits on middle‐​class Americans and small businesses.
“These improvements showcase how we are modernizing both technology and customer service to bring the I.R.S. into the 21st century,” Wally Adeyemo, the deputy Treasury secretary, said during a briefing with reporters.
Adeyemo may have the incorrect century in mind: addressing queries in brick-and-mortar offices and over the telephone is more typical of the twentieth century. However, Adeyemo is correct that the IRS service must be modernized. Last year, only 13 percent (22 million out of 173 million) of phone calls from taxpayers were answered, an increase from 11 percent in 2021. Those who were eventually connected waited an average of 29 minutes (a deterioration from 23 minutes in 2021). Paid tax preparers in a priority queue are only granted access 16% of the time. IRS responses to taxpayer correspondence take 6 months. If you call to report that an identity thief stole your tax refund, you must wait 360 days for a resolution.
Tax Filing Season Begins; Tax Returns due April 17 - Williams CPA &  Associates

As I detail in a forthcoming Cato Institute research, the problem is that IRS enforcement typically receives the lion's share of cash, while taxpayer assistance and innovative technologies receive scraps. For instance, the agency has sixty separate case management systems, which is almost 59 too many. Even if dedicated to customer care, the agency's 5,000 new agents will be unable to answer all 150 million missed calls. A huge paper backlog has accumulated (15 million unprocessed pieces as of New Year's Eve), which will take two years to clear at the current rate.

IRS management has typically viewed its duty as pursuing tax evaders rather than assisting taxpayers in navigating the complex tax system. And the majority of the $80 billion in new cash will be allocated to enforcement rather than service. But the IRS still has options for prioritizing service, which is significant because Americans have no choice but to deal with the slow bureaucracy. Hopefully, the IRS of the 21st century will behave differently than Lily Tomlin's SNL caricature of a phone company representative from the 20th century: "That's your problem, isn't it? … We don't care. We do not need to." The future will tell.