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National Taxpayer Advocate Nina Olson submitted her final report to Congress on Thursday, which included an analysis of the most recent filing season, areas where the agency needs improvement, as well as concerns that taxpayers have low trust levels in the IRS and anxiety about their taxes.
Part of her recommendation to increase trust in the IRS is to create a “Taxpayer Anxiety Index,” which would determine which taxpayers would benefit from a person-to-person conversation with an employee – rather than being pushed off to automated calls or the IRS website. The latter, she noted, can cause an already anxious taxpayer to feel dissatisfied and lose trust in a service provider.
“How taxpayers perceive and feel about the tax agency is directly connected to their willingness to comply with the tax laws,” Olson wrote.
That erosion of trust could lead to more collection actions and audits.
As an example, Olson said when a taxpayer’s refund gets stopped for multiple delays, this anxious person should be connected to a person to get answers.
She did not elaborate on how the index would specifically measure stress levels.
Olson also listed a number of other concerns that she believes should be addressed. She said taxpayer service levels are “woefully inadequate” and “very poor,” adding that the agency has neither a strategy nor budget to improve them. When it comes to specific examples, she noted IRS telephone assistors answered 25 percent of calls this season, with an average hold time of 13 minutes. On the balance due line – which people call to make payment arrangements if they can’t manage their bill – the hold time was nearly 50 minutes.
The president’s budget, however, does not lend itself to improvements in this area – advocating for a 5 percent increase for enforcement, and a 6.6 percent cut for taxpayer services.
When it comes to this filing season, the Tax Cuts and Jobs Act, which made significant changes to the tax code, had the “unintended consequence” of increasing “noticeably” the number of taxpayers who owed the IRS – by about 1.2 million when compared with last year.
The report noted that the average refund this season was down about 2 percent. Though as previously noted by the Trump administration, refund levels do not correlate with whether a person benefitted from the new tax law. In fact, the majority of people were expected to have seen a tax cut.
Olson, who is set to retire, has served as taxpayer advocate since March 2001.