WASHINGTON – The IRS is planning to push you to fire up the computer rather than calling for tax help, but the agency's in-house watchdog says that could freeze out millions of taxpayers or force them to pay for advice.
As part of a plan that would focus more on online accounts for the 150 million individual taxpayers and 11 million businesses seeking help and information, the IRS may soon dramatically scale back telephone and face-to-face service, National Taxpayer Advocate Nina Olson said in her annual report to Congress.
Olson said the IRS should be more open about its plans and that service cutbacks may cause an increasing number of people to turn to tax preparers and software such as TurboTax to file their returns.
That would increase tax compliance costs for millions of filers.
"Implicit in the plan — and explicit in internal discussion — is an intention on the part of the IRS to substantially reduce telephone and face-to-face interaction with taxpayers," Olson's report said. "The key unanswered question is by how much. ... It is incumbent upon the IRS to be much more specific about how much personal taxpayer assistance it expects to provide."
The IRS said Olson's report did not paint an accurate picture. It said taxpayers want new options to interact with the agency and that moving more communications online would free up resources for traditional services.
"The IRS remains fully committed to personal service to taxpayers, and the IRS believes increasing the availability of self-service interaction frees up in-person resources for taxpayers who truly need them, including those who are not comfortable online or don't have personal access to a computer," the statement said.
Taxpayers currently make more than 100 million calls a year to the IRS and more than 5 million visits to the agency's walk-in assistance centers.
Olson said millions of taxpayers do not go on the Internet and that millions more are reluctant to share sensitive information online, as envisioned by an IRS plan for future operations. That plan has been under development for a year-and-a-half.
The agency has scaled back taxpayer services while putting in place budget cuts imposed by Republicans in Congress. As a result, many calls to IRS information centers go unanswered and those who do get through get answers to only the simplest questions. The agency also no longer helps low-income taxpayers file their returns and it conducts fewer audits.
Congress has cut the agency's budget by about 19 percent since 2010, after adjusting for inflation. Last month, Congress finally gave the agency a budget boost, including $290 million in additional money for taxpayer assistance.
Olson said the evolving IRS plan has "many positive components," such as new online taxpayer accounts that would speed information to taxpayers. That is likely to reduce demand for overburdened telephone and face-to-face interactions with the agency.
Still, Olson said, many people seeking help from the IRS don't have "cookie cutter" problems that can be handled online. For instance, last year more than 9 million filers experienced refund delays or received IRS notices after submitting their returns proposing to adjust tax payments.
"They will agree to assessments and adjustments they never should and they will forfeit significant due process protections," the report said. "All because they can't talk with an IRS employee about their situation or because they can't afford to pay someone to help them."
Olson's warnings stem from limited public pronouncements about the agency's planning and internal IRS discussions. She said the IRS should make its plans public.