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At the IRS, no catastrophes, but a "crisis in service"

When it comes to the IRS, no news is good news. That's especially so because most of the attention it has been getting involves how budget cuts have hobbled the agency in recent years amid increasing responsibilities such as the new tax wrinkles stemming from the Affordable Care Act (ACA).

But IRS handling of Obamacare has actually earned the agency something that it doesn't get all that often: praise -- although it's hardly effusive.

"There have been some glitches along the way, but there haven't been any catastrophic missteps," said Kristin Esposito, a senior technical director at the American Institute of Certified Public Accountants, in an interview. "They worked really hard up-front. They did a good job."

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People had good reason to wonder if the IRS was up to the job given the botched rollout of the Obamacare website and the cloud the agency has been operating under for allegedly targeting nonprofits affiliated with the Tea Party.

To make matters worse, The Department of Heath & Human Service's sent out incorrect information to hundreds of thousands of taxpayers about how much of a health care subsidy they were to receive. The Hill noted that H&R Block (HRB) began advertising about President Barack Obama's signature legislative achievement in 2013 so its tax preparers wouldn't get blamed by people who didn't get the refunds they expected.

Moreover, the IRS budget has been slashed by about 17 percent since fiscal 2010. As a result, it had no choice but to divert employees to the ACA from other jobs in the agency because the demands of the law were considerable, according to Howard Gleckman of the Tax Policy Institute. Service suffered as a result. That's a big deal because the IRS typically receives 100 million phone calls, 10 million letters and 5 million in-person visits every year from taxpayers seeking help.

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"That meant those people weren't able to do their regular jobs," Gleckman said in an interview. "The IRS has not been a very well-run organizations for a long time. ... They have struggled with technology ... they are way behind the curve in how they use technology to collect money."

Nina Olson, the IRS National Taxpayer Advocate, recently told Congress "we are facing a crisis in taxpayer service." Indeed, the IRS answered only 40 percent of the calls it received from taxpayers seeking assistance. People who managed to get through had to wait for 26 minutes on average.

"The IRS is currently failing to meet taxpayer needs, which erodes taxpayer trust in the system and undermines voluntary compliance," Olson said.

In a recent speech before the National Press Club, IRS Commissioner John Koskinen argued that the agency has had to do more work with fewer resources. IRS staffing is at 87,000, a level not seen since the early 1980s, and it expects to lose at least 3,000 more employees through attrition by Oct. 1.

"Between 2010 and 2014, the IRS lost over 13,000 employees," Koskinen said. "Every state in the country now has fewer IRS employees than they did a few years ago -- meaning fewer people to help with taxpayer service and enforcement."

Even scarier is the demographic breakdown of the IRS workforce. More than half of employees will be eligible to retire next year, and by 2019, that figure will rise to 40 percent. The IRS has only about 1,900 workers under the age of 30, and about half of those are part-time.

"These negative impacts of our budget situation on our workforce are generally overlooked in our funding discussions," Koskinen said. "And yet these issues are critical to the future of the agency and will only grow in importance in the months and years ahead. "