The National Taxpayer Advocate, Nina E. Olson, has identified multiple significant problems and challenges that she hopes the Internal Revenue Service (IRS) will resolve in 2019. The following are 6 of the biggest challenges she’s included in her latest objectives report to Congress:
1. Taxpayers Need Guidance on the Recent Tax System Overhaul
The IRS has been in the process of implementing changes that result from the new Tax Cuts and Jobs Act (TCJA), which the United States Congress enacted and President Trump signed on December 22, 2017.
This act overhauled numerous aspects of tax law. Virtually every taxpayer will be affected by the changes in some way. Staff at the taxpayer advocate’s office estimates that the IRS is having to reprogram 140 systems and make revisions to 450 publications and forms to accommodate the changed tax laws. Furthermore, there are aspects of the new law that haven’t yet been finalized in the official register; they are still subject to refinement.
Even seasoned tax professionals have questions about the finer points of the new tax laws.
Unfortunately, a government shutdown has further complicated the situation. The IRS is not fully staffed during the shutdown. Taxpayers who are calling the IRS with questions or to resolve tax situations aren’t able to get through to someone who can help them.
2. Communication Channels Need Improvement
The taxpayer advocate argues that US taxpayers have a right to obtain high-quality service when seeking help in their efforts to comply with US tax law. She points out that the IRS has been proactive about maintaining online self-help tools but has not been as proactive about maintaining communications through other channels – and, in fact, took steps to deliberately discourage phone communications. According to the taxpayer advocate’s report, the phone line service levels at the taxpayer protection program (TPP) dropped as low as 42 percent during the tax filing season in 2018. That was before the government shutdown.
Considering that around 14 million taxpayers do not have convenient internet access, developing an omnichannel communication strategy is a high priority for 2019. A callback feature is one recommended solution that could help taxpayers reduce the time they spend waiting on hold for assistance with from an IRS staff member.
3. Scammers Are Creating Major Problems for Legitimate Taxpayers
In 2016, scammers bilked the US government out of about $1.6 billion through tax refund fraud schemes. A significant percentage of these cases were identity theft cases where the scammer pretended to be a taxpayer in order to collect that person’s tax refund.
In response, the IRS has implemented fraud detection schemes that are only partly effective. One of the downsides is a false detection rate that can hurt legitimate taxpayers who are wrongly suspected of fraud. In 2017, two-thirds of the tax returns that the IRS’ fraud detection technology flagged as possibly fraudulent turned out to be legitimate.
These false positives resulted in huge inconveniences for legitimate taxpayers. They endured long waits to get their refunds. In some cases, they also had to jump through additional hoops like calling the IRS or appearing in person to confirm the legitimacy of their tax returns.
These are not the only problems the IRS has had to deal with. There are many others, ranging from miscalculated collection statute expiration dates to an ineffective and costly private debt collection system. However, these are 3 of the most compelling problems the agency will attempt to resolve in 2019.