Every year, the Internal Revenue Service (IRS) strives to improve its services and address the needs of taxpayers across the nation. To ensure transparency and accountability, the National Taxpayer Advocate releases a midyear report to Congress, highlighting the challenges faced during the filing season and outlining strategic priorities. In this article, Optima Tax Relief explains the key takeaways from the latest report and how the IRS plans to enhance its operations for the benefit of taxpayers.
Filing Season Challenges
The midyear report from the National Taxpayer Advocate identifies various challenges encountered during the filing season. Some of the notable issues include:
- Backlog of Returns: The IRS faced delays in processing both original and amended tax returns due to increased workloads and resource limitations. There are currently 15.9 million unprocessed paper returns for 2022 and 2023. There are also 7 million unprocessed amended returns for 2022 and 2023. This resulted in delayed refunds and heightened frustration among taxpayers.
- Customer Service: High call volumes and limited availability of IRS representatives led to extended wait times for taxpayers seeking assistance. The report emphasizes the need to improve customer service to enhance taxpayer satisfaction. There are currently 10.3 million unprocessed taxpayer correspondence and Accounts Management (AM) cases.
The report also outlines the strategic priorities that the National Taxpayer Advocate aims to address to improve the overall taxpayer experience. These priorities include:
- Addressing Taxpayer Rights: Protecting taxpayer rights is a fundamental aspect of the IRS’s mission. The National Taxpayer Advocate emphasizes the need for clear and transparent communications to ensure taxpayers are aware of their rights and responsibilities. This is especially necessary as the IRS plans to increase compliance among high-income taxpayers, large businesses, and pass-through entities.
- Improving Correspondence: Most IRS audits are done through correspondence, which taxpayers find confusing. To make matters worse, over 41% of correspondence audits resulted in no-response in 2022, and only 20.8% reached an agreement. The Taxpayer Advocate Service (TAS) hopes to improve the correspondence examination process.
- Implement Systemic First-Time Penalty Abatement: In 2021, the IRS granted first-time penalty abatement to 200,000 taxpayers, but there were over 4 million who qualified for penalty relief and did not receive it. The TAS hopes to ensure that more taxpayers receive abatement if they are eligible.
Every year, the National Taxpayer Advocate must submit their reports to Congress with administrative recommendations. The IRS is then required to respond to these recommendations within three months. In 2022, the National Taxpayer Advocate made 46 recommendations and the IRS implemented 38, or 83%, to some extent.