By Martha Waggoner, for the Journal of Accountancy
The IRS has made great strides in customer service, such as accepting its 1 millionth submission through the Service's online Document Upload Tool, but it still has much room to improve, including to the wait time to resolve taxpayer identity theft cases, officials said Wednesday.
IRS Commissioner Danny Werfel and Laurel Blatchford, Treasury's chief implementation officer for the Inflation Reduction Act, provided a quarterly update to reporters on efforts to transform the IRS through funding from the 2022 legislation and on its strategic operating plan.
The Inflation Reduction Act of 2022, P.L. 117-169, allocated $80 billion to the IRS over 10 years, which was cut by $20.2 billion under the Further Consolidated Appropriations Act, 2024, P.L. 118-47, which Congress passed in March. The appropriations act also provided the IRS $12.3 billion as a base budget for fiscal year 2024, the same as in fiscal year 2023.
"We are reversing situations that have long hampered the IRS and frustrated taxpayers and the tax community," Werfel said. "There should be no doubt that we have much more work to do, but we are making substantial progress."
Online document upload tool
The IRS launched the Document Upload Tool in 2021 in a limited format, then expanded its use in 2023. The tool allows taxpayers and tax professionals to respond digitally to eligible IRS notices by phone or computer.
The number of uploads "means that taxpayers and tax professionals are leveraging this new option in droves to respond digitally to the eligible IRS notices …," Blatchford said. "And that is a big deal."
Problems remain
But the IRS is failing taxpayers who are victims of identity theft, and improving the wait time of almost two years to resolve those cases is a priority, Werfel said.
National Taxpayer Advocate Erin Collins said in her midyear report to Congress that as of April, the IRS was taking over 22 months to resolve cases in its identity theft victim assistance unit, which had about 500,000 unresolved cases. She described the delay as "unconscionable."
"The wait time and the length of time to get those tax records correct is too long," Werfel said. "It's a complicated process … but that is not an excuse. We have to shorten that time frame, and it's something that I should be held accountable for and the team should be held accountable for as we move forward."
Online service upgrades
Improvements include expanded functionality of the online IRS services, the agency said in a news release:
- Individual online accounts that allow taxpayers to, among other things, retrieve their tax-related information from one source and see a comprehensive overview of their account information, including the status of an in-process tax refund.
- Improvements in the business tax account, which is now available in Spanish. Business taxpayers can see their balance due and make payments in one place.
- More forms can be filed electronically, including Spanish and English versions of Forms 941, Employer's Quarterly Federal Tax Return, and 943, Empoyer's Annual Federal Tax Return for Agricultural Employees, and English versions of Forms 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, and 945, Annual Return of Withheld Federal Income Tax.
- Thirty forms can be submitted on mobile devices, with taxpayers submitting over 72,000 such forms since the September 2023 launch.
- A redesign of 100 of the most common notices that individual taxpayers receive, part of the work to prepare for the 2025 filing season as part of the simple notice initiative. These notices make up about 90% of total notice volume sent to individuals; in 2022, about 150 million such notices were sent.
The IRS also said it is improving internal operations, such as updating outdated human resource information technology systems.
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