Taxpayer Advocate Says IRS Improvements Still Not Good Enough

The IRS has made enormous strides in recovering from pandemic-era challenges, says Erin M. Collins, the national taxpayer advocate. But her new annual report makes it clear that the IRS still has a long way to go to achieve its goal of becoming an efficient, modern tax agency.

“After several difficult years for taxpayers, the IRS, and society in general, tax administration in 2023 mostly managed to leave its COVID-19 problems behind,” Collins writes. “The IRS eliminated most of its processing backlog, generally paid refunds timely, and answered taxpayer telephone calls at pre-pandemic levels.”

Collins adds that the “good news is that, with limited exceptions, we are back to business as usual. The bad news is that the baseline level of ‘business as usual’ was not good enough.”

The report cites 10 areas that need improvement at the IRS, including more rapid return processing, better hiring and training processes, and stronger efforts to prevent and address identity theft. Simply answering the phones remains a sore spot. Collins says that although the agency claims that it answered 85% of calls during the most recent tax season, that number is a technicality, and the true rate is more like 35%, with only 29% of calls being answered during the 2023 fiscal year overall.

IRS Commissioner Danny Werfel acknowledged that a lot of work still needs to be done. “I feel like there have been some critical advances and some important building blocks are in place,” he told The New York Times. “I have never tried to explicitly or implicitly indicate that any victory lap is appropriate.”

Werfel said that billions of dollars in funding cuts for the IRS being through by Republicans in Congress would not hurt the agency’s current modernization projects, at least not in the short run. But at some point, the reduction in funds would hurt those efforts. “We’re going to at some point in the future hit the cliff,” he said.

Read the full taxpayer advocate report here.