Taxpayer advocate: IRS better prepared for tax season with customer service hires; challenges remain

Advocate's outlook for 2023. 

The Advocate predicted that taxpayer service will improve in 2023. "We have begun to see the light at the end of the tunnel," she wrote. "I am just not sure how much further we have to travel before we see sunlight." 

The report cites three reasons for this positive view:

1. the IRS has largely worked through its backlog of unprocessed tax returns, even though it remains challenged with a high volume of suspended returns and correspondence;  
2. Congress has provided the IRS with significant additional funding to increase its customer service staffing; and  
3. using Direct Hire Authority, the IRS has recently hired 4,000 new customer service representatives, and it is seeking to hire 700 additional employees to provide in-person help at its Taxpayer Assistance Centers.

But the Advocate cautions that the improvements will not be immediate. "Staff increases come with growing pains," she wrote. "As new employees are added, they must be trained. The IRS does not maintain a separate cadre of instructors for most jobs.  

Instead, experienced employees must be pulled off their regular caseloads to provide the initial training and act as on-the-job instructors. In the short run, that may mean fewer employees are assisting taxpayers, particularly experienced employees who are likely to be the most effective trainers." 

She also pointed out that until additional fully-trained employees are on board, taxpayer service will continue to be a zero-sum game. For example, customer service representatives in the Accounts Management function split their time between answering the phones and processing taxpayer correspondence.  

If the IRS assigns more employees to answer the phones, correspondence processing will be slower. Phone service will decline if the IRS assigns more employees to process correspondence. 

"The IRS will have to perform a difficult balancing act with its current resources and must ensure it does not create a new paper backlog in 2023 by reassigning too many Accounts Management employees from processing case inventories to answering the phones," she writes.  

Taxpayer advocate service administrative recommendations to the IRS.

The report also makes administrative recommendations to the IRS. In August 2022, Congress enacted the Inflation Reduction Act (IRA), which provided the IRS with funding of nearly $80 billion over the next ten years to supplement its annual appropriations. The report said that this additional funding could be a gamechanger for taxpayers and tax professionals. 

"If spent wisely, this funding will give IRS management the tools it needs to bring U.S. tax administration into the 21st century by enabling it to hire and train the workforce of the future, replace antiquated IT systems, and generally revamp the taxpayer experience based on principles of fair and equitable tax administration," Collins wrote. 

In an August 17, 2022, memorandum, the Secretary of the Treasury directed the IRS Commissioner to produce an operational plan within six months that details how the additional IRA funding will be spent. In the report's preface and in discussing the 10 most serious taxpayer problems, the Advocate recommends numerous initiatives for inclusion in the plan, including the following:

1. Hire and train more human resources employees to manage hiring all IRS employees.  
2. Ensure all IRS employees – particularly customer-facing employees – are well-trained to do their jobs.  
3. Create robust and accessible online accounts with functionality comparable to that of private financial institutions and through which taxpayers and practitioners can access, download, and upload material information.  
4. Temporarily expand uses of the Documentation Upload Tool (DUT) or similar technology.  
5. Improve the readability of tax transcripts.  
6. Enable all taxpayers to e-file their tax returns.    

National taxpayer advocate "purple book": legislative recommendations to strengthen taxpayer rights and improve tax administration 

In addition, the report includes the National Taxpayer Advocate's 2023 Purple Book that proposes 65 legislative recommendations for consideration by Congress.

Other sections in the report

The report contains additional information including a taxpayer rights assessment that presents performance measures and other relevant data, a description of TAS's case advocacy operations during FY 2022, a summary of key TAS systemic advocacy accomplishments, and a discussion of the 10 federal tax issues most frequently litigated during the preceding year.  

More information can be found by reading the full taxpayer advocate report.

What can we expect for the 2023 tax season? 

Clearly, the IRS has made significant progress to return to "normal." That is, they will be ready to process current-year returns on a much more timely basis…more in line with pre-pandemic levels. The result is that taxpayers should receive tax refunds significantly sooner than they have since the COVID lockdowns, even for those filing paper returns.  

In addition, the hiring of what will soon be close to 5,000 new staff should help in getting through to a person at the IRS on both the PPS and taxpayer phone lines. As the Advocate cautions, the new staff will take time to be trained and fully functional. She estimates that significant improvements to customer service should not be expected until mid-2023. Tax professionals and taxpayers will likely endure another challenging (if not somewhat improved) tax season.