National Taxpayer Advocate wants Congress involved in IRS Future State planning

The National Taxpayer Advocate is not giving up on her quest to ensure that digital enhancements to Internal Revenue Service efforts are just that and not replacements for current, lower-tech taxpayer service offerings. National Taxpayer Advocate Nina E. Olson discussed IRS customer service in March in advance of the April filing deadline. Click image to watch the full video at C-SPAN. Nina E. Olson has previously raised questions about increased computerization of IRS customer service options. She’s concerned that those not comfortable with conducting business on a computer or other digital device will be inconvenienced or worse. Those with limited broadband service also could suffer in a move to a more digital IRS, said the Taxpayer Advocate. And now Olson is calling on Congress to look into the proposal, which the IRS has dubbed its Future State plan. Add-ons only: At the IRS Nationwide Tax Forum last week in the Washington, D.C., area, Donna Hansberry, deputy commissioner of the IRS’ Tax Exempt and Government Entities Division, offered the gathering of tax professionals a glimpse of the agency’s Future State. As I noted in my post last week at my other tax blog, Hansberry said IRS digital options are meant to supplement, not be a substitute for existing services. That means that folks who still want to call the IRS toll-free number for help or head to a Taxpayer Assistance Center for face-to-face help, will still have those options. The IRS also made this point, among others, in its written response to Future State concerns that Olson raised in her annual her annual report to Congress back in January. Published as part of Olson’s second volume of her annual report, the IRS said the Advocate’s characterization of the Future State in her taxpayers’ most serious problems list is too narrow. The impression that the Future State is fully developed is incorrect, says the IRS. It is “still very much under development.” And that development process, according to the IRS, involves seven cross-functional IRS teams, which include representatives from the National Taxpayer Advocate’s Office. These groups are currently working on what it will take to deliver 18 Future State initiatives, including digital, analytic, and communication capabilities. Digital is just one part of the plan: The IRS does indeed envision more digital offerings over time. These, says the IRS, will let taxpayer interact with Uncle Sam’s tax office in ways similar to how they digitally deal with their banks, retailers, and doctors. However, the IRS says it “has absolutely no intention of leaving critical taxpayer needs or preferences unsatisfied.” “We recognize there will always be taxpayers who do not have access to the digital economy, or who simply prefer not to conduct their tax business with the IRS online. The IRS remains committed to providing the services these taxpayers need,” according to the IRS. Additions, not replacements: Specifically, adds the IRS, expanded digital, online and self-service capabilities are not intended to replace existing telephone and face-to-face taxpayer services. Rather, the digital options will be new choices for taxpayers who prefer online interaction. “These new capabilities will complement our existing service options, which will remain available for those who wish to utilize them,” says the IRS in its reply to Olson. “The IRS is building the Future State with the benefit of taxpayer perspectives gained through various surveys, analyses and conjoint analyses that began in the early 2000s with the Taxpayer Assistance Blueprint.” Advocate pleased, but cautious: Olson says in her latest report that she is pleased by the actions the IRS has taken since the publication of her first report earlier this year. And she noted that she will continue to discuss the Future State proposal in the public forums she is holding this year. The Taxpayer Advocate also wants to get Congress involved. That’s generally not what the IRS wants to hear, since it hasn’t had much luck with Capitol Hill in its funding efforts. But those financial issues, says Olson, are why she’s calling for Congressional hearings on the IRS Future State. Congressional purse presentation: “Budget constraints have been a significant driver of the IRS’ push toward online taxpayer accounts,” says Olson in her latest report’s reply to the IRS reply. “In Congressional testimony, for example, the Commissioner has stated that the move toward online accounts ‘is driven, in part, by business imperatives; when it costs between $40 and $60 to interact with a tax‑ payer in person, and less than $1 to interact online, we must reexamine how we provide the best possible taxpayer experience.’” However, adds Olson, taxpayer service historically has been labor-intensive. Realistically, she argues, online accounts and other digital services probably will not reduce demand for telephone and in-person service by IRS employees. “That means that either (1) the IRS will continue to provide the services taxpayers want but will not be able to reduce costs or (2) the IRS will reduce costs but to do so will have to stop providing the personal service that taxpayers need,” says Olson. “Ultimately, the IRS must work within whatever budget it is given.” If the IRS implies that online accounts will enable it to do a better job of meeting taxpayer needs at lower cost, Congress will likely give the agency only the amount of money needed to do that. However, Congress needs to be better informed about the tradeoffs that must be made. More communication from all affected: So Olson is recommending that Congress hold hearings during the next few months on the Future State of IRS operations. Specifically, she says: “These hearings will help foster better communication between the IRS and Congress on the front-end, potentially reducing the risk of continuing conflict in the future. These hearings should seek testimony from groups representing the interests of individual taxpayers (including elderly, low income, disabled, and limited English proficiency taxpayers), sole proprietors, other small businesses, and Circular 230 practitioners and unenrolled tax return preparers. They should also include witnesses who can address the additional compliance burden the CONOPS [Concept of Operations] will impose on various categories of taxpayers as well as the likely impact of the CONOPS on the overall rate of voluntary tax compliance.” Knowing how Congress, particularly the House, likes to grill the IRS, I suspect Olson, Hansberry and IRS Commissioner John Koskinen better clear a chunk of calendar time to discuss the agency’s Future State and future funding. Added tax blogging: I usually blog over at Bankrate Taxes Blog on Tuesdays and Thursdays, but last week I was at the aforementioned IRS tax forum in the D.C. area. So my post on IRS plans for a more digital future was my sole post. But I’ll be back on schedule tomorrow. Thanks for reading my added tax thoughts there, or here the following weekend or later, like today, when I’m still recovering from my travel. Yes, I’m still milking that excuse, professionally and, as the hubby can attest, personally! You also might find these items of interest: Digital IRS is costing those who can least afford it IRS’ 35-cent solution and other tax-filing numbers $10,000 crowdsourcing prize available to designer of Future IRS taxpayer accounts website

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National Taxpayer Advocate wants Congress involved in IRS Future State planning