For answers to your tax questions, please call Kevin M. Sayed, J.D., LL.M., at 252-321-2020. The following article by Joe Davidson was originally published by The Washington Post.
Taxpayer trust in tax system and voluntary compliance have been undermined.
President Trump’s partial government shutdown is over, but the haunting effects are not.
Perhaps nowhere is that demonstrated more than in the Internal Revenue Service, one agency that affects all Americans.
Listen to the words of advocate Nina Olson, an independent official within the IRS. Her latest report describes an agency with a “shocking” level of service, suffering a “cycle of frustration,” and one beset with long-standing problems made worse by the 35-day partial shutdown.
She described an agency so damaged that taxpayer trust and confidence in our tax system have been crippled.
“It is irresponsible for an agency that touches all aspects of people’s lives to be underfunded, understaffed, and at the mercy of shutdowns,” she wrote. “It is making strategic decisions that ultimately burden taxpayers, increase its own rework, and create distance and distrust between taxpayers and the tax agency, thereby undermining voluntary compliance.”
The report provided a slew of statistics demonstrating the depth of the problem. For the last week of the shutdown, ending Jan. 26, 12.8 percent of taxpayer calls on installment agreements and balance-due questions were answered. Those that were answered waited 93 minutes. The day before the shutdown stopped, the IRS had:
- “Over 5 million pieces of mail that had not been batched for processing.”
- “80,000 responses to FY 2018 Earned Income Tax Credit audits that had not been addressed.”
- “87,000 amended returns waiting to be processed.”
Metrics like these “translate into real harm to real taxpayers,” Olson said. “And they represent increased rework for the IRS downstream, at a time when the IRS is already resource challenged.”
IRS officials responded with a statement that said the agency “successfully reopened operations following the shutdown, and the agency is seeing a good start to the 2019 filing season. We are continuing to assess the impact of the shutdown on our various operations across the agency and remain proud of the many IRS employees who have risen to the resulting challenges.”
The full impact of the shutdown won’t be known for “months, and even years, down the road,” Olson predicted. She praised IRS employees who “returned to work with energy.”
National Treasury Employees Union (NTEU) President Tony Reardon said that “in some cases, employees are being asked to work overtime specifically to get the agency caught up. Orientation for new hires and refresher training for employees is also behind schedule in some areas. These are all signs of an agency still grappling with a record five-week shutdown on the eve of a tax filing season that was already going to be challenging because of the new tax law.”
Despite its many difficulties, the IRS remains the lifeblood of the federal government. Tax collectors raise about 93 percent of the national budget. They do so on a relative shoestring. The $3.5 trillion collected in fiscal 2018 was on an $11.43 billion IRS budget, a return on investment of about 300 to 1.
“I don’t know how anyone can read this report,” Reardon said, “and not be alarmed at the massive amount of damage that has been done to the agency’s workforce and the taxpayers they want to serve.”
The damage did not begin with the shutdown. Years of taxpayer-advocate reports, congressional testimony, taxpayer protests and employee complaints have chronicled an agency that suffered at the hands of Republican appropriators who wanted to punish the tax collectors. Republicans charged the IRS with unfairly scrutinizing conservative nonprofit organizations under the Obama administration, despite evidence that progressive groups also were scrutinized.
The IRS still has not recovered. The title of the report’s list of “Most Serious Problems” is illustrative — “The Taxpayer’s Journey.”
The problems, which cause “extreme frustration” for taxpayers and employees, include “antiquated technology systems” that if not replaced will “increasingly harm taxpayers and impair revenue collection,” according to the report. Olson also cited agreements between private tax collectors (PCA) and low-income taxpayers “to make payments they cannot afford.” Of “taxpayers who made commissionable payments while their debts were assigned to PCAs,” she added, “24 percent had incomes at or below the federal poverty level.”
Because of the shutdown, employees estimate that “it may take them almost a year to catch up, but many taxpayers cannot wait that long because they need their responses” by April 15, when 2018 taxes are due, said David Carron, a revenue agent speaking as president of NTEU Chapter 6 covering Louisiana and Arkansas. “We would relate this to an assembly line that has been stopped for over a month, but the same amount of products have to be produced” by then.
Federal charity drive extended
The donation period for the Combined Federal Campaign (CFC), the federal workplace-giving vehicle for a variety of charities, has been extended until Friday. The original date was Jan. 11, which came during the shutdown.
“Many charities came to the aid of Federal employees throughout the shutdown in December and January,” said a memorandum announcing the extension from Keith Willingham, CFC director for the Office of Personnel Management. “Those organizations are under fiscal pressure with increased demands and because of an interruption.”
That represents a reversal of position.
On Dec. 19, shortly before the shutdown began, Willingham said that “under no circumstances will the 2019 CFC solicitation period be extended.”
Wiser heads prevailed.