IRS watchdog: Taxpayers on their own this tax season

The battle between Congress and the IRS could have serious consequences for Americans this tax season, CBS News' Wyatt Andrews reports.

Tens of millions of taxpayers rely on the IRS for help every year, either filing their taxes or resolving disagreements. But a report from the IRS internal watchdog, out just 90 days before this year's filing deadline, warns taxpayers that this year they're on their own. The report blames Congress for cutting the agency's budget by 17 percent and blames the IRS for using the cuts to slash customer support.

Nina Olson, the official who represents taxpayers within the IRS' headquarters, is warning everyone to expect the worst customer service the IRS has delivered in a decade.

Her yearly report said that because of budget cuts taxpayers can expect less help on the phone, less help with tax preparation and more obstacles when disputing an IRS mistake.

"I think that for taxpayers they will not be able to get assistance from the IRS; they will not get their questions answered," Olson said.

For example, every year the IRS gets around 100 million phone calls from taxpayers and historically has answered those calls in under four minutes. But the Olson report said this year most people wanting to speak to a live representative will not get through at all and the wait for those who do get through will exceed 30 minutes.

"As I say to people, they should bring their knitting when they call the IRS. They can do something on the phone while they're waiting," Olson said. "You'll probably knit a sock."

The report admits that IRS budget cuts are partly its own fault. Congressional Republicans slashed the agency's funding as payback for the targeting scandal when IRS officials investigated mostly conservative groups applying for tax-exempt status.

When Lois Lerner, the former head of the tax exemption unit, appeared before Congress, she denied wrongdoing.

"I have not done anything wrong," she told lawmakers.

But then she took the Fifth Amendment.

"I decline to answer that question," Lerner told lawmakers.

Olson said those who think cutting the IRS' budget is punishing the agency are wrong.

"Who you're punishing are the United States taxpayers; you're punishing yourselves," Olson said.

The report also said the budget cuts will hurt the IRS' ability to track the billions in subsidies given to taxpayers under Obamacare and the billions earned by U.S. corporations but kept overseas.