IRS Service Challenges Insights for Tax Professionals
Recent findings from the National Taxpayer Advocate's report shed light on significant issues within IRS service metrics, directly impacting your clients' experiences. The IRS's primary metric for gauging taxpayer service, the level of service (LOS), has come under scrutiny. Based solely on answered calls on accounts management lines, this measure fails to capture the full scope of taxpayer interactions. While the IRS boasts an 88% LOS for the 2024 filing season, this figure is misleading. It only accounts for about 35% of IRS phone lines and doesn't reflect whether callers' issues were actually resolved.
Digging deeper reveals significant disparities in service levels across different IRS phone lines. Non-accounts-management lines, which many of your clients may need to use, show alarmingly low answer rates. The taxpayer protection program line, crucial for addressing identity theft concerns, only answered 16% of calls. Similarly, the installment agreement and balance due line managed to answer just 42% of calls. These statistics paint a picture of frustration for clients and tax professionals alike attempting to resolve specific tax issues.
Perhaps most concerning is the situation facing identity theft victims. These individuals, often from low-income backgrounds, are currently enduring an average wait of 22 months for case resolution and refund issuance. This marks an increase from the already lengthy 19-month average reported in 2023. With a staggering backlog of 500,000 cases as of April, this issue shows no signs of quick resolution.
The report also highlights potential misallocation of IRS resources. Evidence suggests the IRS overstaffs its accounts management phone lines in pursuit of higher service metrics. During the 2024 filing season, employees spent a whopping 1.1 million hours idle, waiting for calls. This time could have been better utilized for processing correspondence or addressing the mounting identity theft case backlog.
Despite these challenges, it's important to note that the 2024 filing season improved overall. Quick refund delivery and widespread adoption of e-filing indicate positive trends in IRS performance compared to the difficulties experienced during the pandemic period.
For your practice, these insights necessitate a strategic approach to client management. It's crucial to set realistic expectations, particularly regarding wait times for specific IRS services. Encourage clients to address potential issues early, avoiding last-minute rushes that could encounter service bottlenecks. Continue promoting e-filing to leverage the IRS's improved processing in this area.
Given the severe delays in identity theft case resolution, client education on prevention becomes paramount. When clients do face complex issues or fall victim to identity theft, prepare them for potentially lengthy resolution processes.
Where possible, guide clients towards IRS online services or written correspondence for matters likely to face long phone wait times. This approach can help mitigate frustration and potentially speed up issue resolution. Preparers should also be setting their CAF numbers up using the IRS
online portal and resolving issues electronically whenever possible to help speed up resolution time.
Looking ahead, the IRS has outlined objectives for fiscal 2025, including modernizing return processing, improving employee retention, and enhancing transparency in its modernization efforts. As tax professionals, staying abreast of these developments will be key to providing valuable counsel to your clients.
By understanding and communicating these IRS challenges and improvements, you can better serve your clients, manage their expectations, and navigate the complex landscape of tax administration. Continue to monitor IRS service metrics and process changes to ensure your guidance remains current and valuable in this ever-evolving field.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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