Report: IRS cuts services to save money

Taxpayer advocate annual report to Congress

The Internal Revenue Service may be tightening its belt to save money at the expense of taxpayer services, a new report states.

Nina Olson, IRS’ national taxpayer advocate, told Congress in her annual report that the IRS may be skimping on taxpayer services for many reasons, including the expansion of its enforcement arm.

Her report lists a number of services that have been pared or eliminated, making it harder for taxpayers to comply with an increasingly complex tax system.

For example, the IRS has eliminated TeleFile, cut back the number of returns IRS employees prepare for taxpayers who need help, and reduced the percentage of calls that IRS telephone helpers answer.

Congress blocked the IRS from cutting availability to its toll-free call service.

Olson said she is worried that the IRS is expanding enforcement at the expense of taxpayer services. “These actions are taking place without any empirical evidence that the reductions will not harm taxpayers and not result in decreased compliance,” Olson wrote in her report released Jan. 10.

Before making changes, Olson said, the IRS must conduct research and develop cutting-edge strategies for taxpayer services.

In the bigger picture, she said, the agency should simplify the tax code so taxpayers can more easily file their returns.

“It should be simple enough so that taxpayers can prepare their own returns without professional help, simple enough so that taxpayers can compute their tax liabilities on a single form, and simple enough so that IRS telephone assistors can fully and accurately answer taxpayers’ questions,” Olson’s report states.

The Taxpayer Advocate Service is an independent organization within the IRS.

Olson's report also mentions progress. "What is important…is that progress was made in both the IRS' service and enforcement functions -- something the Oversight Board has advocated since its inception," the report states.

In a statement in November 2005, IRS Commissioner Mark Everson said customer service has been increasing.

In 2005 taxpayers electronically filed more than half of all returns. IRS help on the toll-free line hit an accuracy rate of 89 percent while customer satisfaction with the toll-free service was 95 percent, he said.