Millions of unprocessed letters and telephone chaos: how the shatdown influenced the work of the IRS

The longest shatdown in US history created problems for taxpayers due to a lack of personnel and chaos in the Internal Revenue Service (IRS).

Фото: Depositphotos

This is stated in the report of Nina Olson, the head of the Taypayer lawyer service (this is a public institution that helps taxpayers to solve their problems with the IRS), writes USA Today.

According to this document, taxpayers cannot receive frozen returns; present evidence in their favor if they are faced with the threat of a fine; or resolve issues on the audit of tax returns from previous years. During the 35-day shatdaun, the IRS responded only to a small proportion of calls from taxpayers, and this indicator did not improve much during the first week of filing declarations, after the government’s closure was terminated.

In addition to the shatdaun, the IRS still had pending proceedings for the previous tax filing season and was lagging behind in the implementation of new tax law changes.

“These five weeks of shutdown come at a worse time for the IRS—before the first filing season since the introduction of a massive new tax law with a completely restructured tax form,” Olson wrote.

The Taypayer Bar Service report, which is usually presented to Congress in December, was postponed due to the shutdown. In response to criticism, the IRS leadership said it plans to review the report in detail.

Shutdown due

During the first part of the shutdown, the IRS employees could not answer customer phone calls, issue refunds, create payment agreements, or handle disputes. From January 22, the service put into place an emergency plan, according to which some IRS employees could answer telephone lines, issue refunds and enter into agreements on installment payments.

By the time the shutdown ended, the IRS had the following problems:

• more than 5 million emails that were not accepted for processing;
• 80 000 Earned Income Tax Credit (EITC) audit requests for the previous tax season, some of which included frozen tax returns;
• 87 000 corrected declarations that still need to be processed.

The service also failed to comply with 170 000 requests for the W-2 and W-3 forms, which employers had to submit to their employees by the end of January. The agency instead recommended that employers consider applying for an extension to the issuance of these forms, which means that some taxpayers may receive these forms late.

Telephone chaos

The IRS customer support telephone service was also interrupted and was not fully restored a week after the completion of the shutdown, which coincided with the start of the 2018 year for the filing of declarations.

In the first week of filing declarations, responses were provided to less than half the calls to the account management line and to the 38% of calls to an automated consultation system. In the IRS, only one of every 15 calls to the tax debt installment service was answered, and only after an almost 81-minute average waiting time.

“This means that during that week, 93,3 percent of taxpayers who called to make an installment payment arrangement were not able to speak with a live assistant,” the report said.

Emergency cases

Taxpayers who are in need and would like to receive tax returns as quickly as possible or agree on exemption from the IRS fine could not do this during the shatdaun. No IRS employee was authorized to work during this period to assist a taxpayer experiencing difficulties due to the IRS.

Old technology

Even without the Shatdaun, the IRS was in a difficult situation. The report notes that the agency uses information technology systems that are the oldest in the federal government.

“For the past 25 years, the IRS has tried and failed to replace them,” the report said.

The taxpayer information is stored in 60 different systems, which makes it impossible for the agency to access all customer data at the same time.

In a statement, the IRS said that upgrading its IT infrastructure remains its top priority, stressing that this "is crucial for the future tax system of our country."

Tax Law Changes

The IRS also had difficulty implementing tax law changes that required the replacement of three tax return forms—1040, 1040A and 1040EZ—along with the creation of six new schedules for some credits and deductions. The IRS was expected to publish new guidance, notices and frequently asked questions to help the public navigate the new tax laws.

Because of this work, the IRS did not provide new requirements for electronic filing to tax application development companies such as TurboTax and H&R Block until September 2018, much later than in previous years. It also created difficulties and delays for some taxpayers, as these companies also needed time to implement these requirements into their programs.

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