Internal Revenue Service Building in Washington D.C., USA. It is the headquarters for the Internal … [+]
“What a difference the past 12 months has made.”
That was how IRS Commissioner Danny Werfel kicked off remarks focused on the first anniversary of the Inflation Reduction Act. The Act significantly boosted funding for the IRS, guaranteeing tens of millions of dollars over its operating budget for improvements and enforcement.
That hasn’t always been the case. “For more than a decade,” Werfel said, “the agency has struggled.” Declines in funding meant cuts to services and hiring. According to the 2022 IRS Data Book, in fiscal year 2022, the IRS used 79,070 full-time equivalent (FTE) positions, a decrease of 9.1% since fiscal year 2013.
But, Werfel said, by using the IRA funding, the IRS has made an immediate, meaningful difference in how it serves taxpayers, including hiring new employees. While admitting hiring challenges, including ensuring that hiring keeps pace with attrition, Werfel estimates that the IRS is approaching 90,000 FTE. That may look high compared to 2022, but it’s the same as roughly a decade ago.
Improving the taxpayer experience has been a key goal of Werfel since his tenure began earlier this year. And, he notes, IRA funding has helped the agency provide better taxpayer service during the 2023 filing season.
Teens in circle holding smart mobile phones
Phone Service
One significant example of how the experience was different: This year, the IRS answered the phones. According to a TIGTA report, as of September 24, 2022, taxpayers made 148.9 million total attempts and 118.6 million net attempts to contact the IRS by calling the various customer service toll-free telephone assistance lines. The IRS reported that 29 million calls were answered with automation, and telephone assistors answered 8.8 million calls. That worked out to a 14% level of service—down from 2021. And the average answer speed was 31 minutes, longer than in 2020.
In 2023, the IRS reported an 87% Level of Service on its main taxpayer help line. To quote Jon Lovitz’ Ernie Capadino from A League of Their Own, “Well then, this would be more, wouldn’t it?”
According to Werfel, through the end of the 2023 filing season, the IRS answered 7 million calls—3 million more than in same period the year before. They cut phone wait times to three minutes from 28 minutes.
Other Communications
Face-to-face service was also improved. The agency says it served 140,000 more taxpayers in-person than last season. And the agency hired 700 new employees to open or reopen 42 taxpayer assistance centers.
New voice bots and chatbots can now help taxpayers, including obtaining account transcripts and getting answers to questions about balances due. Voicebots can understand and produce language—basically, voice menus that allow you to communicate and ask questions. Chatbots do the same thing with written text (think of the pop-up chat features you’ve seen on private sector websites).
Currently, the IRS has nine taxpayer-facing voice bots in operation and ten chatbots. To date, taxpayers with balances due have messaged online with Collection chatbots more than 1.6 million times. More than 13 million taxpayers have successfully called in and gotten information through voice bots. Nearly 24,000 payment plans have been established via voice bots representing over $152 million in projected revenue since going live in 2022—eclipsing the project costs of $13 million, a significant return on investment.
Changes Ahead
More changes are coming. Phone service will get even better, according to Werfel. A customer callback option—long available in the private sector—has arrived at the agency and will make it possible for IRS employees to cover up to 95% of callers seeking live assistance. When call volumes are high, taxpayers can request a call back for an additional 73 toll-free applications, bringing the total number of applications with an option for customer callback to 116 taxpayer-facing applications.
Werfel also touted the IRS’ new Paperless Processing Initiative. The agency is committed to reducing paper. In 2023, they scanned 225 times more forms than in 2022, with hopes to ramp up to completely paperless processing by 2025 (don’t worry, you can still file by paper if you’re old school, but the agency will digitize the form once it hits their system). They’re also allowing taxpayers to respond to notices and forms online. Currently, taxpayers can respond to ten of the most common notices online—that will expand to an additional 51 forms and letters online.
These are, he says, just a fraction of what’s underway. And, he says, taxpayers should be able to feel a difference so far.
Enforcement
In a nod to concerns about enforcement efforts from a better-funded IRS, Werfel noted that the IRS has taken “swift and aggressive action” to ensure that high-income taxpayers pay the tax they owe. According to the agency, in recent months, IRS Criminal Investigation closed several cases in which wealthy taxpayers were sentenced for tax evasion, money laundering, and filing false tax returns. And recently, IRS announced that they successfully pursued 175 delinquent tax cases for millionaires, generating $38 million in recoveries.
A year ago, Werfel said, there were suggestions that there was an “army of IRS agents” out to shake down everyday taxpayers. But, he says, “this is unmistakably not the case.” There is, he says, “no mythical army of IRS agents on the streets—it’s really the opposite,” citing a recent policy change ending most unannounced visits to taxpayers by agency revenue officers.
What’s Next
These changes, he says, are intended to ensure that the IRS is better meeting the needs of taxpayers.
That doesn’t mean that things are perfect—far from it. “The IRS has a lot of catching up to do,” Werfel says. The goal is to build capabilities and solutions to help taxpayers now —and in the future.
But, he warns, any efforts to cut the budget will impact service. The money that Congress has earmarked for the agency, he says, is a “once in a generation chance” to make a difference in the way the agency serves taxpayers.
