To address its backlog of unprocessed previous-year tax returns and weak customer support, the IRS should offer higher pay to attract new employees and rely on short-term help from outside consultants, according to testimony from National Taxpayer Advocate Erin Collins to the House Ways and Means oversight subcommittee on February 8.
Collins was the sole witness at a subcommittee hearing convened to discuss findings of the NTA’s 2021 annual report to Congress as well as issues facing taxpayers this tax filing season.
The NTA report described 2021 as the “most challenging year ever for taxpayers,” whose phone calls to IRS support lines were answered only about 11% of the time. The IRS’s Where’s My Refund tool—accessed 632 million times last year—lacks information on unprocessed returns and provides no context on status delays, the report found. The IRS’s shrunken workforce lacked the resources, manpower, and time to meet demand, leading to millions of refunds that have yet to reach taxpayers. For the full report, see National Taxpayer Advocate delivers annual report to Congress.
“[T]axpayer service must improve,” Collins said in her opening remarks. “And for that to happen, the IRS needs to eliminate the backlog, pay out those delayed refunds, and get current on its work.”
Asked by Rep. Bill Pascrell, D-NJ, chair of the oversight subcommittee, how the IRS can boost staffing now given its “budget woes,” Collins admitted that it is a “challenge in the market” to bring in new workers.
The IRS has filled only 179 of the 5,000 positions opened to add to the roster of return processers. Collins noted that submission-processing employees are typically hired at or around the federal government’s GS-3 level, at which the base salary is $24,749. Even if new hires were offered better pay and incentives, Collins said it was unlikely “we are going to be able to hire enough people to get us out of this hole.”
Collins suggested that outside vendors could be brought in to chip away at the “manual” work, since paper returns are the most delayed because they need to be reviewed line by line. Simultaneously, the IRS should “leverage” other employees to immediately tackle such clerical tasks.
Increasing automation of IRS processes is another way to reduce the backlog and improve taxpayer service, but the IRS would need “sustained, multiyear” funding to modernize its systems, Collins said.
“The fact that we’re still on 1980s technology is absurd,” the subcommittee’s ranking member, Tom Rice, R-SC, said at the hearing. “We have got to do better than this. We are doing a disservice to our taxpayers.” Collins said that IRS IT experts would be “happy” to work with Congress in developing a budget that would bring the agency into the 21st century.
Had the Build Back Better Act as passed by the House survived debate in the Senate, the IRS would have received additional funding of $80 billion over 10 years. Collins is still advocating for the package. “I think infusing capital into the IRS is very important,” she answered in response to Rep. Judy Chu, D-CA, on how the investment would improve IRS operations.
Emphasizing taxpayer support alongside technological upgrades would promote the “tax administration that we think the country deserves and, in my opinion, it does deserve,” Collins said.
Click here for a recording of the hearing.
Subscribe to our Checkpoint Daily Newsstand email to get all the latest tax, accounting, and audit news delivered to your inbox each weekday. It’s free!