IRS phone service was inadequate prior to the pandemic and spiraled from there, with calls reaching an all-time high and level of service (LOS) falling to an all-time low. Inadequate phone service disadvantages taxpayers, harms tax compliance, and causes frustration and exasperation. I have concerns this upcoming filing season may be just as difficult.
The IRS encourages taxpayers to make use of online resources to answer questions and resolve problems, and although those resources can be helpful, taxpayers often require or prefer live telephone contact. For example, they may need to seek clarification of new tax return instructions, obtain an explanation regarding the impact of tax legislation, or follow up on an IRS notice.
As with last year, I anticipate an onslaught of calls to the IRS phone lines during this year’s filing season. Among other things, these calls likely will be driven by inquiries relating to Advance Child Tax Credit payments, the 2021 Recovery Rebate Credit, unprocessed returns and refund claims, and unresolved 2020 tax return issues.
As I discussed in my recently published Annual Report to Congress, it is imperative that IRS phone lines be readily accessible to answer taxpayer questions and provide necessary assistance. Taxpayers understandably become frustrated and demoralized when their good-faith efforts to reach the IRS are met with extended hold times and “courtesy disconnects.” Tax compliance depends on prompt, high-quality customer service, and when compliance becomes unduly burdensome, the IRS runs the risk that taxpayers will simply quit trying.
Taxpayers have difficulty reaching IRS customer service representatives (CSRs) to obtain tax assistance and account information, but this past year presented extreme challenges, as call volume nearly tripled and only 11 percent of calls reached a CSR. Specifically, during fiscal year (FY) 2021, the IRS received a record 282 million calls, but only 32 million of those calls were answered by CSRs. In the first half of 2021 alone, fewer than 15,000 employees were available to handle more than 240 million calls – one person for every 16,000 calls. The IRS reports average hold times of 23 minutes, but practitioners and taxpayers have observed that hold times were often much longer, and frustration and dissatisfaction with the low level of phone service were high throughout the year.
Last year, many factors contributed to the IRS receiving a record number of telephone calls and answering the lowest percentage of calls in its history. Taxpayers sought information and assistance regarding delayed refund claims, unprocessed returns, and new tax legislation. This caused hardship for some and confusion for many. The IRS, however, was ill-equipped to deal with the resulting flood of inquiries. For example, when Congress enacted sweeping legislation in March 2021 favorably impacting taxpayers’ 2020 taxes, call volume spiked and LOS for the Accounts Management (AM) phone lines fell as low as four percent. Things have improved somewhat, but not enough. The number of AM calls answered by an assistor to date in FY 2022 is 20 percent, and for the same period in FY 2021 it was 16 percent. As the filing season progresses and more taxpayers reach for the phones, I suspect the percentage of calls answered will continue to drop.
Beyond their responsibilities for providing phone service, CSRs also assist with IRS processing of a paper inventory backlog that currently comprises approximately:
These overwhelming demands create a vicious cycle. CSRs are too busy answering the phones to address their paper backlog and return processing is delayed as a result. This prompts taxpayers to call to ask about the status of their returns, which further swamps the phone lines and pulls CSRs away from return processing, perpetuating the spiral of delay.
One sign of the extent to which these delays have seeped into the tax culture is the cottage industry that has sprung up to assist tax practitioners in getting through to the IRS. Some practitioners hire companies that use automated technology to continually dial IRS phone lines until they finally get through on behalf of their customers. One firm charges up to $1,000 per month for this service. A troubling aspect of this entrepreneurialism is that it has the effect of further straining IRS phone lines and making it even more difficult for the average taxpayer to reach the IRS. It’s a bad look for the IRS and unfair to taxpayers when some can essentially pay to cut to the front of the line and receive services that should be equally available to all.
There are two primary strategies for remedying deficiencies in IRS phone service. The first is to hire more CSRs to help minimize the imbalance between calls coming in and the personnel to answer them. The other approach is to employ technology to improve the customer experience and ensure that the only calls that CSRs end up fielding are those that require live support. Although these strategies can, and should, be pursued in tandem, both are facing significant obstacles.
The IRS’s customer service workforce has shrunk by over 40 percent since 2010. To reverse this trend, the IRS announced aggressive CSR hiring goals. The IRS, however, has not been able to meet these goals. Among other reasons, this may be attributable to the relatively low pay of CSRs when compared with the demands of the position. Representatives of the National Treasury Employees Union (NTEU) point out that the starting salary for CSRs is below $37,000 a year and that, at this level, the IRS is competing with the fast-food industry. They also explain that the job is much more involved than fast food, with high stress and unreasonable expectations. CSR applicants are not beating a path to the IRS’s door. Regardless, current budget constraints and larger economic trends will make it impossible for the IRS to simply hire its way out of the phone service problem.
Recognizing this, the IRS is in the process of planning and implementing technology that can help streamline customer service. The goal is to provide taxpayers with assistance from a wide range of platforms, including AI chat and voice bots, which can field basic questions and accomplish tasks such as setting up tax payments. The IRS anticipates that in the long run, this technology will route taxpayers to CSRs in the appropriate department who will have at their disposal comprehensive case management software, allowing them to quickly address taxpayer issues.
These improvements, which include customer callback capacity, should reduce call volume and allow CSRs to focus on the calls to which they can bring the most value. They should also improve taxpayer wait times, as chat and voice bots ideally can more quickly connect with taxpayers to complete tasks such as checking the status of a return or establishing an installment agreement. In early January, IRS Small Business/Self Employed (SB/SE) deployed voice and chat bots with basic functionality, including accepting one-time payments, and plans to implement robotics with more sophisticated capacities including setting up streamlined installment agreements later in the spring.
IRS phone service must improve, and this improvement requires hiring, training, and retaining more CSRs while maximizing their efficiency with up-to-date customer service technology. The IRS is aware of these necessities and is taking strides to bring about upgrades. Both hiring additions and technology enhancements require funding, however. Money alone will not necessarily result in progress, but the lack of multiyear funding can stifle it. This is where Congress comes into play.
Until this year, Congress has allocated only status quo funding for taxpayer services. Taking inflation into account, this represents a funding decrease between FYs 2019-2021. For FY 2022, the IRS requested a 13.65 percent increase in the taxpayer services budget, which would lead to an allocation of $2.94 billion. At this writing, Congress has not yet enacted a full-year FY 2022 budget. While Congress must decide how much is to be spent on the IRS and how it is to be allocated, one thing that is certain is that without significant and consistent funding for customer service, including phone service, this crucial aspect of the IRS mission will continue to deteriorate and taxpayers will suffer. I urge Congress to allocate consistent multiyear funding to address these crucial customer support needs.
Meanwhile, the best days to call the IRS are Wednesdays, Thursdays, and Fridays. The IRS advises that wait times are the longest on Mondays and Tuesdays, Presidents Day weekend, and close to the April filing deadline. So, if you need to reach the IRS, call Wednesday through Friday, and bring lots of patience.
Remember: The IRS and Taxpayer Advocate Service are hiring, and you too could be a part of the solution!
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.