IRS watchdogs continue to beat drum on security and service

If death and taxes are the only two certainties in life, customer service and security are the only two certainties in taxes — at least when it comes Internal Revenue Service oversight.

The National Taxpayer Advocate and Electronic Tax Administration Advisory Committee (ETAAC) released their respective reports, both of which reviewed the 2017 filing season, highlighted focus areas and made recommendations for the tax agency to address in the short and long term.

“The IRS must change its focus to taxpayer service, outreach, and education first,” National Taxpayer Advocate Nina Olson said in her mid-year report. “It must revise its mission statement back to an emphasis on taxpayer service and add a focus on taxpayer rights. It must reinstate a geographic presence for its audit, collection, and appeals functions as well as expand outreach and education. It must pick up the phone and talk with taxpayers, and listen to them when they speak. To enable the IRS to do these things, Congress must provide sufficient funding. And Congress should conduct sufficient oversight over the IRS to ensure that it actually does them.”

The House Appropriations Committee proposed an $11.1 billion FY18 budget for IRS, a cut of $149 million below the fiscal year 2017 enacted level and $111 million above the President’s budget request.

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The ETAAC said in its report that improving taxpayer experience requires ongoing creativity and focus to build secure systems that are also easy for customers to use.

“A system that is secure but that few can use will not be successful for IRS as it expands some of its key online services,” the committee said. “IRS must strive to achieve a situation where services are both secure and easy to use and access.”

Online not a substitute for in-person

Personalized service and taxpayer experience are areas both the taxpayer advocate and ETAAC highlighted as priorities for IRS to address.

The advocate for years recommended an online account application as a resource for people who have the broadband access and knowledge to use the option.

“For that limited taxpayer population, the online account, in its current state and planned future releases, provides a convenient method to look up tax information, such as balance due, refund status, and case updates,” Olson said in her report. However,  she  added there are about 33 million taxpayers without broadband connections, and only about 30 percent of taxpayers actually pass e-authentication requirements for the online account program.

“While the online account application is a good information retrieval tool, it is not a substitute for personalized service where an IRS employee actually takes the time to hear an explanation of the taxpayer’s unique facts and circumstances, and either explains the complex rules and procedures to the taxpayer or makes the appropriate adjustments to the taxpayer’s account,” Olson said. “Accordingly, depriving taxpayers of adequate personalized service options jeopardizes many taxpayer rights, but most importantly the taxpayer’s right to challenge the IRS’s position and be heard.”

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Olson said her office is working with the IRS’ Office of Online Services (OLS) to incorporate recommendations from focus groups and surveys, into the next iteration of its online account program.

The advocate’s office also is working in fiscal 2018 to “advocate for low income and other vulnerable populations who have low broadband rates, taxpayers who cannot pass the strict e-authentication requirements and other taxpayers who need or prefer personal interaction, by working with the IRS to ensure it maintains meaningful and high-quality service options for these populations.”

The ETAAC urged IRS to expand its outreach and communication “to diverse communities.”

This includes “partnering with organizations experienced in creating pro-security consumer education content for diverse communities.”

IT challenges

The committee provides feedback and guidance on IRS’ electronic tax administration, and reviews the efforts of the IRS Security Summit. IRS Commissioner John Koskinen organized and convened the agency’s Security Summit for the first time in March 2015. It’s made up of federal and state tax administrators, as well as industry leaders. It has seven working committees.

ETAAC’s report stressed the importance of data and IT security, including directions to require security training for tax professionals.

“The IRS should take steps to make tax return preparers more aware that educational courses about internet and data security will qualify for IRS-recognized continuing education credits, assuming the course meets IRS standards for such education,” the committee recommended.

The committee also recommended IRS increase participation in the Identity Theft Tax Refund Fraud Information Sharing & Analysis Center (IDTTRF‐ISAC), and provide adequate funding.

Olson in her taxpayer advocate report,  said the IRS is struggling with the implementation of its enterprise case management (ECM) project.

“The IRS has many information technology challenges, including the two oldest IT systems, each nearly six decades old, in the entire federal government,” Olson said. “It also has somewhere between 60 and approximately 200 different case management systems. The age, number, and lack of integration across these systems, as well as the lack of digital communication and record keeping, cause waste, delay, and difficulty for IRS employees, including those in [Taxpayer Advocate Service], to perform their jobs efficiently and provide quality service to taxpayers.”

Part of the problem is that IRS is not designing the project from the ground up, nor engaging its employees, Olson said.

In its response to the recommendation IRS said it is engaging employees, including through forums and by creating “an ECM communications plan that will provide channels for employees to share ideas and suggestions.”

A mixed bag

While the reports overlapped in some areas, each had its own focused recommendations.

ETAAC recommended expanding financial institution engagement, while Olson warned that the IRS’ private debt collection program would “disproportionately burden taxpayers in economic hardship.”

As for the 2017 filing season, Olson said a majority of taxpayers had no problem filing their returns, but it was a mixed bag for people who needed help.

“During Filing Season (FS) 2017, the IRS answered 79 percent of the telephone calls it received on its ‘accounts management’ (AM) telephone lines that were routed to a telephone assistor, up from 72 percent during FS 2016,” Olson said. “In addition, the time these taxpayers spent on hold declined from 11.1 minutes in FS 2016 to 6.5 minutes in FS 2017. Thus, taxpayers generally were better served on the AM telephone lines. However, taxpayer service was less successful in other areas.”

For example, the IRS only answered about 40 percent of calls to its  installment agreement/balance due” line, compared to 76 percent in 2016, and the wait times went from 11 minutes to 47 minutes.

ETAAC estimated an 86.5 percent e-file rate for individual returns, and the committee will be assessing Security Summit actions and recommendations for 2017 in the coming months.