Jonathan Baer kept a diary of his attempt to get his 2020 tax refund during which time he slowly built up a paper folder full of tax-related paperwork.
Over 40 phone calls were made to the Internal Revenue Service as part of the attempts. He didn’t speak to anyone during most of them.
He claimed that the infrequent calls that did succeed in getting through to a human remained silent regarding the standing of a refund for a tax return he had filed in April 2021.
Baer usually files his taxes electronically, but that year he had to prepare specific tax schedules, so he turned in a paper form.
Then, in July, the “significant”-sized refund for the Bay Area-based startup business consultant showed up. He had not submitted his tax return in 15 months. I was very happy to be able to store that file folder, he stated.
Baer’s drawn-out tax tale is coming to an end, but another, the bigger one is just beginning.
On Sunday, Senate Democrats passed a package of bills dealing with taxes, healthcare, and the environment to help the IRS.
The bill was approved by the House of Representatives on Friday by a vote of 220-207. The law is currently awaiting President Joe Biden’s signature.
Over ten years, the Inflation Reduction Act requests an additional $80 billion for the IRS.
Before the legislation was passed by the Senate and the House, several tax experts questioned, however, how much of a difference the funding would actually make for the overworked and underfunded agency as well as for people like Baer who are looking for tax guidance and assistance.
The IRS would receive funding to augment annual legislative appropriations, which would be used to increase the number of audits of large firms and affluent individuals, modernize IRS technology, enhance customer service, and restructure the workforce.
According to the organization, the number of full-time employees decreased by nearly 13% from 2012 to almost 79,000 in 2017. (During that time, the U.S. population grew by about 8%.)
At a time when audit rates have been declining, more than half of the $80 billion will go toward hiring more auditors and staff to enforce the tax rules against the wealthy.
However, how the money will be used and how much it will enhance customer service have been major concerns for those who have observed confusion among citizens and even tax professionals trying to interact with the IRS in recent years.
Here are some other figures to think about. According to an examination of operations through March by an IRS watchdog, during the most recent tax-filing season, in which the IRS forewarned of hassles ahead, customer-service representatives were able to respond to 2.7 million of the roughly 27 million calls made during open hours.
The IRS reported that as of early August, there were still 9.7 million unprocessed tax-year 2021 returns in its backlog. In addition to 7.9 million paper returns that are awaiting inspection and processing, there are 1.8 million returns that require adjustments and “special handling.”
The backlog is a result of pandemic-related office closures, the labour-intensive manual processing of some returns, three rounds of stimulus checks, and six waves of child-tax-credit monthly instalments, in addition to the enormous amount of additional work.
Audits, tax enforcement, and other investments are important, says Edward Karl, vice president of tax policy and advocacy at the American Institute of CPAs.
However, he questioned if the $3.1 billion set aside for taxpayer services was “enough money” given the backlog and the three filing seasons of “horror” that had before them. Before the Senate vote last Saturday, he observed, “It feels like it’s not.”
To reduce the backlog of tax returns, the IRS has organized its employees into “surge teams” and has been aggressively hiring new employees. Even more can be done, according to Karl’s group.
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The additional funds are undoubtedly welcome news for Nina Olson, a former national taxpayer champion at the IRS, even though some areas, including taxpayer service, could use a bigger share. When the bill is implemented, it will be crucial for the IRS to outline how it will utilize the funds and how it will evaluate its effectiveness, according to her.
Tell us how it will affect me, and by the way, don’t say you’ll give me a chatbot, Olson commanded. To help taxpayers in specific circumstances, the IRS has begun deploying chatbots, some of which have AI capabilities and enable users to set up recurring monthly payments on a tax obligation.
But because the majority of taxpayers have queries that are based on extremely unique situations, Olson said it frequently comes to a point where they prefer to deal with an actual person at the IRS rather than a machine. She told MarketWatch, “They don’t want a canned answer.
