The Internal Revenue Service is quietly moving toward a high-tech future that could end up hurting taxpayers and costing them more money, a new report warns.
Since 2014, the IRS has invested millions of dollars on a plan to make better use of its limited resources by moving more of its work online, including plans to adopt online taxpayer accounts.
But the plan, which has yet to be made fully public, could add to people’s costs come tax season — and discourage them from paying their dues, warned the National Taxpayer Advocate in its annual report to Congress, released Wednesday.
“I have significant concerns that the IRS is embarking on a path that will unintentionally undermine taxpayer rights rather than enhance them, thereby eroding taxpayer trust further,” wrote Nina Olson in her report to Congress.
Olson said she is not against the IRS becoming more technologically savvy. But she is worried that the IRS’ is creating a “pay-to-play” system, wherein only people who can afford professional help will receive assistance filing their taxes.
OIson called for the IRS to “immediately publish its plan and solicit public comments.” She also asked that Congress hold hearings in the next few months on the IRS’ plans to move more activity online.
“Congress needs to assert its oversight authority and insist that the IRS come now, sooner not later, to explain the specifics of its future state vision,” Olson said.
In an emailed statement, the IRS defended its plan, saying it will allow the agency to remain “fully committed to personal service to taxpayers.”
“These efforts are ongoing and have not been finalized, and the IRS emphasizes feedback from outside parties has been and will continue to be an important part of the process,” the agency statement said. “The National Taxpayer Advocate’s report does not paint a full picture of these evolving Future State efforts. The Advocate seems to want the IRS to continue to do business the way we did 10 years ago.”
While only some details of the plan have been made public, Olson said the IRS’ high-tech future “calls for expanding the role of tax return preparers and tax software companies in providing taxpayer assistance.”
The Advocate’s report raised security concerns around giving tax preparers and other third-parties access to taxpayers’ online accounts. It also raised concerns around forcing taxpayers to seek professional help.
“Implicit in the plan – and explicit in internal discussion – is an intention on the part of the IRS to substantially reduce telephone and face-to-face interaction with taxpayers,” the report said.
Yet, history has shown that technological advancements are unlikely to reduce taxpayers’ needs for personal help when it comes to such a complicated and personal matter as taxes.
Indeed, the number of taxpayer calls to the IRS customer service lines increased by 59% over the past decade, even as the IRS increased its e-filing rate from 54% to 85% and added tax information on the IRS.gov website, the report said.
Taxpayers may also wish to eschew online accounts in favor of face-to-face or telephone contact for other reasons, including fears of identity theft and overall discomfort in dealing with touchy financial matters online, the report said.
The National Taxpayer Advocate works within the IRS but provides its annual, independent reports to Congress on issues that could hurt taxpayer.
The Taxpayer Advocate has increasingly warned about reduced levels of assistance to taxpayers from the IRS, which has suffered budget cuts and staff reductions.