IRS phone service is falling behind: Internal watchdog

Telephone service at the IRS is a mess, with employees answering way fewer phone calls than official metrics suggest while they spend more than a million working hours per year just waiting around for the phone to ring, according to the latest annual report from the agency’s internal watchdog, the National Taxpayer Advocate (NTA).

While the IRS boasted of a 75-percent “level of service” on its telephone lines to Congress in October, employees answered only 29 percent of taxpayer calls over the fiscal year, the NTA found.

That’s down from 35 percent of calls that actually got an answer during the 2023 filing season, during which the IRS reported its “level of service” to be 85 percent, according to the NTA’s midyear report released in June.

“Levels of service” are an internal metric that excludes the number of people who are routed to a robot or who simply hang up before they reach anybody to help them with their issue, the NTA noted.

“IRS telephone assistors spent 1.27 million hours during the 2023 filing season waiting for the phone to ring. That accounted for 34 percent of the time IRS employees were assigned to answer telephone calls, and translates to more than 650 unproductive staff years,” the NTA reported.

Outdated technology prevents IRS employees from easily switching back and forth between answering phone calls and processing tax returns, which is the reason for so much wasted time, the NTA said.

“The IRS continues to hire additional staff to help improve taxpayer service, add technology tools and improve compliance efforts as well as focusing on paperless processing. Taxpayers can expect to see more improvements during the 2024 filing season and beyond as the IRS continues to put in place more changes made possible by the additional funding,” the IRS said in a statement provided to The Hill. 

Despite the operational inefficiencies, service levels did improve substantially last year following agency shutdowns during the pandemic that resulted in massive backlogs of unprocessed tax returns and even greater volumes of unanswered phone calls, Taxpayer Advocate Erin Collins noted.

That progress was sped along by an injection of cash into the agency by Democrats’ Inflation Reduction Act (IRA) passed in 2022.

Meant to update the IRS’s long-outdated technology, some of which still runs on programming languages developed in the 1950s, the funding will also increase the IRS’s audit capacity. A new division in the IRS has been set up specifically to go after unpaid taxes held by business classified as partnerships, which make up a significant portion of annual $668 billion in uncollected taxes.

But that funding boost — and along with it, IRS service levels — is under threat.

Republicans have in just one year clawed back $20 billion of the initial $80 billion funding boost, which was meant to be spent over the next decade.

“The concessions we achieved will include an additional $10 billion in cuts to the IRS mandatory funding (for a total of $20 billion), which was a key part of the Democrats’ ‘Inflation Reduction Act’,” Speaker Mike Johnson (R-La.) wrote in a Sunday letter to colleagues announcing a top-line budget deal.

Democrats say the IRS overhaul is still on course.

“Keep in mind, we already agreed to the $20.2 billion rescission as part of the FRA deal,” a Democratic aide wrote in a note to reporters. “Today’s agreement would make that happen this year rather than over the course of two years.”

“The IRS will still be able to maintain the critical investments we secured during the last congress,” the aide said.

The NTA report also called the IRS out for lollygagging on identity theft cases. 

“[There are] unconscionable delays in assisting victims of tax-related identity theft,” the report says.

“During [fiscal] 2023, the IRS took an average of about 19 months to resolve self-reported identity theft cases and send refunds to the affected taxpayers,” Collins wrote. “I’ll restate that for emphasis: Victims of identity theft have to wait more than a year and a half for the IRS to resolve their cases and receive the monies they are owed.”

This story was updated at 2:27 p.m.