On Wednesday Rep Paul Ryan (R-Wisc.) released a damming report about the IRS’s lack of customer service during the recent tax season. According to the report, the agency’s claim that budget cuts necessitated ignoring 60% of taxpayers’ phone calls was purely fictitious. The exceedingly poor customer service, which came at a time when many filers were forced to contend with extra paperwork owing to the implementation of the Obamacare penalty tax, was under the agency’s control and at its discretion:
During the 2015 tax-filing season, the IRS provided what its own Commissioner described as “abysmal” customer service, blaming skyrocketing wait times for telephone and in-person assistance on agency budget cuts. The IRS even called budget cuts “a tax cut for tax cheats.” But a close review of the agency’s spending shows the IRS deliberately cut $134 million in funding for customer service to pay for other activities. Spending decisions entirely under the IRS’s control led to 16 million fewer taxpayers receiving IRS assistance this filling season. Other spending choices, including prioritizing employee bonuses and union activity on the taxpayer’s dime, used up resources that otherwise could have been used to assist another 10 million taxpayer
In other words, like a petulant child, the IRS decided to punish the Congress by screwing the public.
“These findings are deeply troubling,” said Ways and Means Chairman Paul Ryan (R-WI). “At all times, but especially during tax season, the IRS should put the taxpayer first. But instead, the agency cut funding for the very customer service that taxpayers rely on. The IRS has a lot to answer for, and the Ways and Means Committee is going to hold it accountable.”
According to the report, the IRS collects nearly $500 million in user fees each year that it can spend without congressional approval, and the agency is allowed to allocate that funding as it sees fit. Historically, the user-fee account has primarily supported taxpayer services. In fiscal year 2014, the IRS spent $183 million in user fees on taxpayer services, 44% of the user-fee account. But In response to the fiscal year congressional 2015 budget cuts, the IRS allocated only $49 million on taxpayer services, or 10% of the user-fee account. This decision amounts to a 73% reduction in user fees allocated to customer service, and a 6% decrease in total funding for taxpayer assistance.
Some additional considerations:
- The IRS awarded $60 million in bonuses to its employees, at a time when the IRS did not yet know what its budget would be for fiscal year 2015.
- The amount of time IRS employees spent on union activity would allow for over 2 million additional taxpayer-assistance calls. Despite the agency’s fiscal constraints, it has continued to allow employees to spend hundreds of thousands of hours conducting union activities while at work.
- If the IRS contracted with private debt collectors, it could increase its own enforcement budget by more than $100 million every year.
- The rate of improper payments of the Earned Income Tax Credit has remained consistently high regardless of the IRS’s funding rate.
- Not only did the IRS spend $2.1 million on litigation services that the government could easily have performed itself, but it may have improperly shared confidential taxpayer information.
- Although the IRS has made several unsuccessful IT investments, the agency successfully implemented a comprehensive IT system to implement the ACA.
- At the end of fiscal year 2014, the IRS estimated total tax delinquency was 3.12% for federal employees, representing over $3.5 billion owed in taxes.
Cross-posted at The Lid