The 2015 tax filing season is gearing up to be a nightmare -- the worst in more than a decade -- thanks to fewer and more poorly trained Internal Revenue Service employees. Indeed, the annual Taxpayer Advocate's report to Congress described a frayed tax system unraveling at a rapid pace.
"I believe we need fundamental tax reform, sooner rather than later, so the entire system does not implode," said Nina Olson, the National Taxpayer Advocate in her report.
While the U.S. tax system has become increasingly complex and the IRS is handling millions more returns, the budget for the Internal Revenue Service has slowly eroded, resulting in 12,000 fewer IRS employees and an 83 percent cut in the agency's training budget.
Now the nation's cornerstone tax agency predicts that it will only be able to answer 43 percent of the phone calls it receives during tax season; will be unable to respond to written correspondence for months at a time; and is likely to leave the average caller on hold for 30 minutes or more.
Government officials will only be able to answer "basic" tax law questions -- and only during the normal filing season. Taxpayers who file late will simply not have access to IRS assistance for even fundamental questions about the tax law, according to the taxpayer advocate's report. Additionally, where the IRS prepared more than a half-million returns for needy taxpayers a decade ago, the agency has eliminated return preparation assistance completely.
"These cutbacks leave the IRS with a shrinking workforce whose employees are less equipped to do their jobs," said Olson. "We don't think it's acceptable for the government to tell millions of taxpayers who seek help each year, in essence, 'We're sorry. You're on your own.'"
The dire predictions in the annual taxpayer advocate report come hard of the heels of a leaked email from IRS Commissioner John Koskinen that predicted refund delays and many of the same service problems reported by Olson.
Noting that the budget approved by Congress reduces the agency's resources to levels not seen since 2008, Koskinen said the IRS has no choice but to "do less with less."
That means identity theft reforms will be delayed; hardship cases will go unaddressed and the IRS will be unable to audit as many taxpayers. While the reduced threat of audit may cheer some, it's likely to inspire cheating could cost the government some $2 billion in lost revenue, according to Koskinen's email.
Olson said the state of the nation's cornerstone tax agency is dismal and getting worse.
"When the IRS does not answer the calls its taxpayers are making to it, and when it does not timely read and respond to the letters its taxpayers are sending it, the tax system goes into a downward spiral," said Olson. "For every phone call or piece of correspondence that goes unanswered, there is a great likelihood problems will arise that will require more IRS resources and impose more burden on taxpayers to later resolve. The correspondence inventory backlogs will spill over into the next filing season, further reducing the IRS's ability to deliver a satisfactory filing season for years to come."