In my 2021 Annual Report to Congress, I identified the ten most serious problems (MSPs) facing taxpayers. One of the MSPs I would like to highlight is the IRS’s inadequate online accounts for taxpayers, businesses and tax professionals.
In today’s digital environment, consumers have come to expect the convenience of completing actions on their accounts without the need for face-to-face or telephone assistance. Every day, consumers use their computers or mobile devices to access their accounts with service providers. They pay bills, make changes to their account information, add/cancel services, purchase/return products, conduct banking or investment transactions, review credit card statements, order food deliveries, meet virtually with family members or friends, make inquiries, and even chat with a business customer service representative (CSR). Surprisingly, similar options are not yet available for taxpayers, businesses or tax professionals wishing to engage online with the IRS.
The severe disruption in IRS operations from the COVID-19 pandemic resulting in historically low levels of phone service and long delays for paper processing spotlighted the critical need for the IRS to expand online offerings to assist taxpayers in providing the information they need to fulfill their tax filing and payment obligations. As taxpayers had limited opportunities to interact with the IRS in person or via telephone, the IRS had an opportunity – an obligation, even – to provide key information in a format easily accessible by taxpayers.
Several years ago, one of the services the IRS created is the “Online Account” application that includes a mobile-friendly option. Currently, authenticated users of the Online Account application may, among other capabilities, view account balances, make payments, view tax records, view select notices and letters, and view authorizations for online requests from tax professionals. However, the Online Account application falls short of providing what taxpayers want, need, and expect for service. For example, taxpayers have no options within the Online Account application to resolve simple issues (e.g., certain math errors), chat or schedule a chat with IRS representatives, or provide documentation.
Technology use among other government agencies (such as the Social Security Administration) and within the private sector has heightened expectations for quality online service from the IRS. One would expect that by now, taxpayers should be able to sit at their computer or use their mobile device to quickly access their tax history, view notices, research guidance, provide documentation, take actions to resolve an issue, and access additional support such as communicating with an IRS revenue agent, revenue officer, or appeals officer, all by logging into one portal. Yet, that is not the case.
While the IRS has created some digital self-service options (e.g., IRS2Go app, Where’s My Refund? and Where’s My Amended Return? online tools, and Taxpayer Digital Communications), many of these are standalone applications that are not readily accessible in one central location or capable of providing a holistic experience to taxpayers and tax professionals. Furthermore, business taxpayers currently do not have the ability to access a business online account to even retrieve a transcript or review payments, and tax professionals lack the ability to access their clients’ data within Tax Pro Account. Tax professionals play a key role in tax administration. Providing them convenient access to their clients’ data and allowing them the ability to electronically communicate with the IRS and take actions authorized by the taxpayer would be invaluable in helping tax professionals better assist taxpayers.
Despite its progress, the IRS has yet to develop and adopt a one-stop solution for online and digital offerings that combines communications and interactions with individual and business taxpayers as well as with tax professionals. Imagine what the IRS can accomplish and how much time and effort it could save if taxpayers could easily access their tax information online. I would like to stop merely imagining this; the IRS needs to have robust online accounts available for all taxpayers and tax professionals that provide information, guidance and the capability to work and resolve issues online.
Although I recognize and appreciate the myriad of challenges the IRS faces, including the constraints of implementing legislative changes, congressional budget allocations, limited human resources, cybersecurity concerns, and the transformation of business operations, the need for a more robust online account presence is clear, present, and immediate if the IRS has any hope to avoid future service issues encountered during the 2020, 2021 and 2022 filing seasons.
I support the multiyear IRS modernization plan that envisions the Online Account application becoming the central hub for individual taxpayers to access all of their information and take action where needed. The Online Account application, as a personalized entry to IRS.gov, should:
The IRS should continue to leverage its online services to provide personalized messages based on the specific taxpayer’s interaction. For example, if a taxpayer is viewing payment options in Online Account, it would be helpful if the IRS provided a link to explain, “What to do if you don’t think you owe this amount.” By including targeted links to IRS.gov and IRS video content, the IRS could promote compliance and bolster taxpayer satisfaction relatively inexpensively.
The impact of COVID-19, combined with related legislative tax and economic relief provisions, has created many challenges for businesses that have resulted in an increased need for IRS support. Sadly, there is no comparable version of the Online Account application for business taxpayers. Business taxpayers (large and small) would undoubtedly benefit from a Business Online Account offering, at minimum, the same features afforded to individual taxpayers.
The IRS rolled out Tax Pro Account in 2021 for tax professionals with minimal functionality. The current iteration of Tax Pro Account is severely limited in scope – in essence it only allows electronic filing of a Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization. Also, a tax professional must have an active Tax Pro Account and receive approval from a taxpayer with an active Online Account to utilize Tax Pro Account. Allowing tax professionals more capabilities within Tax Pro Account would not only benefit tax professionals but could also increase the percentage of taxpayers using the Online Account application. I strongly encourage the IRS to prioritize the ability for tax professionals to view their clients’ Online Account information from within Tax Pro Account. This one improvement would be significant for tax professionals in assisting taxpayers to meet their filing and payment obligation and provide much-needed assistance and guidance on tax issues.
Because the IRS is the custodian of sensitive financial information from hundreds of millions of taxpayers, I appreciate the need for it to take precautions to protect its data and prevent fraud, while also prioritizing taxpayer privacy concerns. I commend the IRS on improving the identity authentication process by using a trusted technology partner for the first step in the modernized Security Access Digital Identity process, providing additional protection levels before accessing tax information.
Through a trusted technology provider, taxpayers may choose to verify their identity using a self-service process or with a video chat agent to gain access to digital services. Although the IRS now provides improved options for taxpayers to pass identity authentication through a single secure log-in to access various online applications or services, taxpayers may still encounter difficulty navigating the various online resources available to them. Requiring taxpayers to navigate between several standalone systems with multiple log-ins is unnecessarily burdensome. A single secure log-in combined with a consolidated resources page or customer hub shown after log-in may increase taxpayer confidence and knowledge in using online services and products.
IRS should also provide taxpayer options for those that do not want to utilize or are unable to utilize the online identity authentication process to obtain an online account. IRS should consider allowing taxpayers to authenticate their identity at a Taxpayer Assistance Centers (TAC) or other IRS facilities by providing their identity documents in person. IRS should make the authentication process secure, easy, accessible and encourage taxpayers to establish their online account.
This past filing season, the Where’s My Refund? feature was a highly utilized tool on IRS.gov by taxpayers eager to find out when they can expect their tax refund. In fact, it was accessed 632 million times last year, but it was often unable to provide useful information. For the tens of millions of taxpayers who experienced delays in receiving their tax refunds, the IRS should provide them additional detail regarding the current stage of refund processing, including an anticipated timeline for processing. More specific messaging updated weekly would increase taxpayer satisfaction, decrease the call volume to IRS telephone CSRs, and reduce the need to send paper correspondence. The IRS indicated that it plans to integrate the Where’s My Refund? refund status functionality into the Online Account application. I recommend that the IRS prioritize the funding of these improvements to the Where’s My Refund? and Where’s My Amended Return? tools in 2022 and begin incorporating the data into taxpayers’ online accounts that reflects not only the current refund status but also the prior return status, as millions of taxpayers are still waiting for refunds from the backlog of prior returns.
Online service offerings are even more important for taxpayers as the IRS continues to deal with processing disruptions, low levels of telephone service, delays in correspondence, and limited options for walk-in assistance – currently taxpayers simply do not have many viable options for offline service. I encourage the IRS to prioritize its efforts in expanding its online service strategy and functionality.
The IRS should provide individual and business taxpayers and their representatives the ability to log into one portal with the functionality to:
Eliminating the dependency on paper would be a game changer for tax administration and improving quality taxpayer service while also freeing up vital resources for those taxpayers who do not have the ability to access an online account or do not have the desire to communicate with an IRS employee electronically. The IRS should be raising the bar for tax administration and a robust and secure online account is a must for quality customer service.
The views expressed in this blog are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget.