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Tax & AccountingAugust 16, 2023

Welcome news for Tax Pros and Taxpayers alike, as IRS reports significant service improvements

The agency touts its improved 2023 filing season service, continued technology improvements, and enforcement successes. Tax pros and taxpayers have seen significant improvement, particularly over recent pandemic-related tax seasons.

On the one-year anniversary of the Inflation Reduction Act, the IRS says it has made significant progress toward its goals of delivering world-class service, upgrading its technology, and ensuring high-income taxpayers, large corporations, and complex partnerships pay taxes owed.

Customer service improvements

In particular, the IRS points to the following:

  • Significant progress in its Paperless Processing Initiative: 225X more forms scanned than in 2022, and 51 additional forms and letters available for online response by tax pros and taxpayers.
  • New improvements to customer callback option to better serve taxpayers during high call volume, customer callback option is now available for up to 95% of callers seeking live assistance.

Paperless Processing Initiative milestones reached

The agency announced two new milestones as part of its Paperless Processing Initiative: they are now able to scan 225 times more forms than in 2022, and have enabled tax pros and taxpayers to reply to an additional 51 forms and letters online.

Callback option improved

In addition, the IRS claims it has met its targets to improve its customer callback option, so tax pros and taxpayers do not need to wait on hold during periods of high call volume. The customer callback option are now available for up to 95% of callers seeking live assistance.

Dramatically improved service in filing season 2023

Citing the Inflation Reduction Act resources, the IRS said it delivered dramatically improved service in filing season 2023. They assert an 87% level of service on its main taxpayer help line. No numbers are given for the tax pro line. Additional service-related statistics and highlights shared by the IRS include:

  • 3 million more phone calls answered through the end of filing season 2023 than in filing season 2022.
  • Phone wait times were cut from 28 minutes to three minutes.
  • 140,000 more taxpayers were served in-person than the prior year.
  • 80 times more returns were digitized in 2023 than in 2022 through the adoption of new scanning technology.
  • The entire backlog of unprocessed 2022 individual tax returns was cleared with no errors
  • Two new digital tools were launched.
  • A new direct-deposit refund option for taxpayers filing amended (1040x) returns. These refunds were previously only available by paper check, delaying refunds.

Paperless processing initiative to eliminate paper backlogs and speed refunds.

Using Inflation Reduction Act funding, the IRS launched what it calls the Paperless Processing Initiative to ensure that by filing season 2024, taxpayers will be able to go paperless if they choose to do so, and by filing season 2025, the IRS will achieve paperless processing digitizing all paper-filed returns when received. In effect, this means all paper will be converted into digital form as soon as it arrives at the IRS.

The IRS says that it has made significant progress scanning and e-filing paper returns, scanning approximately 849,000 forms this year, including about 481,400 Forms 940, 304,000 Forms 941, and 64,000 Forms 1040. This is 225 times more forms than were scanned the previous year.

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Customer callback option expanded to further improve phone service.

The agency also announced it has expanded the availability of its customer callback option to cover up to 95% of callers seeking live assistance. Expanding customer callback is one of several improvements to taxpayer service outlined in the agency’s Strategic Operating Plan. The expansion included adding the customer callback option to an additional 73 toll-free applications, bringing the total number of applications with an option for customer callback to 116 taxpayer-facing applications.

Note that we haven’t yet seen updated numbers for the dedicated tax pro phone line. Anecdotally, we hear that there has been improvement, but there remains work to be done.

IRS announces new ability to respond to notices and file online.

Tax pros and taxpayers now can respond to notices online and have new online filing options. Until filing season 2023, when notices for things like document verification were received, responses were limited to snail mail. During the 2023 tax season, responses to ten of the most common notices for credits like the earned income and health insurance tax credits could be done online, a significant improvement.

The agency now offers this capability to an additional 51 notices and letters received from the IRS. These updated IRS notices and letters received in the coming weeks will include instructions that guide them to the appropriate upload tool.

During filing season 2023, IRS also launched an online portal to allow businesses to file form 1099 series information returns electronically. These forms previously needed to be submitted through the mail.

New voice and chatbots improve the tax pro and taxpayer experience.

IRS offered new voice and chatbots to help with a wide range of issues, including securing account. These new self-service options are available 24-7.

During business hours, many of the IRS voice and chatbots provide an option to connect with a live assistor if needed. In all, the IRS has nine taxpayer-facing voicebots in operation today, in addition to 10 chatbots. To date, the IRS notes that taxpayers with balances due have messaged online with Collection chatbots more than 1.6 million times.

And more than 13 million taxpayers have successfully called in and gotten information through voicebots. Nearly 24,000 payment plans have been established via voicebots for a total of over $152 million in projected revenue since going live in 2022—eclipsing the project costs of $13 million.

Expanded in-person service to reach rural, underserved taxpayers.

IRS has hired nearly 700 employees to open or reopen 42 Taxpayer Assistance Centers across the country, while also starting a special series of events to help taxpayers living in areas far from the agency’s in-person offices. Those new or newly reopened Taxpayer Assistance Centers are:

With new Pop-Up Taxpayer Assistance Centers, IRS is giving tax pros and taxpayers living in hard-to-reach areas an opportunity to meet face-to-face with IRS customer service representatives.

IRS touts its enforcement activities.

Ensuring high-income taxpayers pay taxes owed. According to the IRS, they are focused on ensuring high-income filers pay the taxes they owe. Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented the agency from keeping pace with the increasingly complicated set of tools that the wealthiest taxpayers use to hide their income and evade paying their share. They claim they are beginning to close this “gap.”

Pursuing tax-evading millionaires. In recent months, IRS Criminal Investigation has closed a lengthy list of cases in which wealthy taxpayers have been sentenced for tax evasion, money laundering, and filing false tax returns. Instead of paying taxes owed, these evaders spent money owed to the government on gambling, vacations, and luxury goods.

Making delinquent wealthy taxpayers pay taxes owed. In recent months, IRS closed about 175 delinquent tax cases for millionaires, generating $38 million in recoveries. IRS says it will continue to pursue millionaires who do not pay their taxes as the agency ramps up enforcement capabilities through the Inflation Reduction Act.

Clearly, the IRS is beginning to use the Inflation Reduction Act funding to make important tax pro and taxpayer experience improvements. There remains much more work to be done as we approach the beginning of the 2024 tax season… and beyond.

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Mark Friedlich
Vice President of US Affairs for Wolters Kluwer Tax & Accounting
Mark Friedlich, a CPA & tax lawyer, is the Vice President of US Affairs for Wolters Kluwer Tax & Accounting. He is a member of the U.S. Senate Finance Committee’s Chief Tax Counsel’s Advisory Board, advisor to 14 state taxing authorities, and has been a member of the American Bar Association’s Tax Section and AICPA’s Tax Section leadership teams. Prior to joining Wolters Kluwer he was a COO and Principal at PwC.

 

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