The 2015 tax season is certainly proved to be one of the most trying in the IRS’s history. Being the first tax season for administering tax credits and individual mandates under the Affordable Care Act, its just one of the challenges the agency faces.
Shrinking Budgets
The main source of their problems however is the steadily shrinking budget over the last five years. That has the IRS leaning more upon technology based services. For starters, that equals less personnel to assist taxpayers. The Treasury Inspector General for Tax Administration (TIGTA) recently reported that the IRS assistance to taxpayers has dropped 38% this year down from 2014 tax season of 74.7% Those assistance numbers have been declining for several years. According to TIGTA, the number of calls answered in 2012 by the IRS was 8.25 million. This year saw only 4.21 million calls answered. That is a far cry from the 45.6 million taxpayers that actually called the IRS toll free assistance lines, making it less than 10% answered and longer wait times.
Early Returns Statistics
As of March 6, 2015, according to the TIGTA interim report, the IRS received more than 66.7 million returns of which more than 62.3 million (93.5 %) were filed electronically and more than 4.3 million were filed via paper. At this point, the IRS has issued more than 54.2 million refunds totaling more than $162 billion. Additionally, 737,148 tax returns totaling $2.1 billion in Premium Tax Credits were received in advance or claimed at filing. Over 3.7 million tax returns reporting shared responsibility payments for not maintaining health insurance coverage, the results came in for a total over $655 million.
Much more Taxpayers, Less IRS Staff
Even with the shortening of the purse strings, Congress still requires the agency to carry out even more complex tax codes. Practically, that would require the agency to update their information technology systems, which at this time, is a painfully slow effort. IRS personnel count has decreased about 8% and the money for staff training has decreased reportedly around 85%.
Meanwhile taxpayers numbers have grown to about 7 million people according to the IRS commissioner, John Koskinen. He reported in a Senate panel in January, that due to budget cuts, the agency's efforts to modernize their technology would be hampered. According to Koskinen, "We're running applications we were running when John F. Kennedy was president." That answer was given mostly in response to the delay in assigning new tax identification numbers to victims of identity theft but it seems to cover the reason for many of the IRS woes. He also claimed that some of the agency's systems are still running COBOL programming language, which many a college grad could probably recall from the 80's.
Herein lies the conundrum regarding less personnel to train in order to analyze and rewrite the programs into more of the 21st century. According to a January CNN Money report ,when asked by a senator , Koskinen confirmed that the $2 billion a year budget for IT operations that the IRS receives has been going to upgrading the IRS systems that were customized for the 1950's and 1960's. "It's like driving a Model T that now has a great GPS system and wonderful sound system, [and] has a rebuilt engine," Koskinen reportedly said.
New Rules on The Horizon
One of the new laws that Congress expects the budget hampered agency to carry out is the Foreign Account Tax Compliance Act or FATCA. It requires many foreign financial institutions to report accounts held by U.S. citizens to the IRS. According to Koskinen, about 145,000 foreign institutions had to report data under FATCA, thereby causing those systems to be built and rebuilt to collect the data.
At that same conference Taxpayer Advocate Nina Olsen was concerned that the IRS may not receive accurate information from the insurance exchanges handling the Premium Tax Credits.
Meanwhile, victims of identity theft are bound to receive long delays and errors according to a report released by TIGTA, released on April 9. Despite improvements in the detection and resolution in such cases, the budget cuts can still be traced as the main reason for delays.
IRS Commissioner John Koskinen is optimistic for the steady improvement for IRS technology. He'd like Americans to be able to get to the point where they can do all their transactions online like they do with banking. That is still going to require the spending of money to improve the archaic system.
Author Bio:
Hi, I'm a Tax Pro based in Alabama.
I love to write about Tax and Accounting subjects. I'm a small business owner at heart, and enjoy individuals who wish to grow businesses and contribute to the economy.
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