Compared to 2022, the most recent tax season was relatively trouble-free, but national taxpayer advocate Erin Collins believes there is still space for improvement.
According to Collins’ study, the backlog for original paper returns greatly decreased, refunds were issued more rapidly, and customer service increased.
However, the organization continues to have issues, including as a backlog of revised returns and taxpayer correspondence. Compared to last year, the most recent tax season went pretty well. Erin Collins, a national taxpayer advocate, believes there is still opportunity for improvements as the IRS implements modifications to its funding strategy.
“Overall, the difference in between the 2022 filing season and the 2023 filing season was like night and day,” Collins stated in her midyear report to Congress. In comparison to 2022, the taxpayer experience “vastly improved” this year.
According to the study, as of April 22, the backlog of original paper returns had decreased from 13.3 million to 2.6 million, refunds had typically arrived sooner, and critical phone lines had better customer service.
Collins stated that the agency still faces persistent issues, such as a backlog of corrected reports and taxpayer correspondence. Only 6% less amended returns, which need to be processed manually, were filed between April 2022 and April 2023.
The so-called staff retention credit, a convoluted tax incentive from the epidemic era that the IRS is targeting for false and fraudulent claims, is to blame for many updated business return delays. According to the most recent IRS Data Book, as of March 3, more than 866,000 businesses had applied for and been granted the credit, amounting to over $152.6 billion.
Put service and technology first
Collins also provided suggestions about IRS Inflation Reduction Act funding, highlighting the demand for better technology and taxpayer service.
She stated, “To accomplish and maintain transformational progress over a longer period of time, the IRS has to concentrate like a laser beam on IT,” highlighting the significance of “robust online accounts,” e-filing for all returns, quicker relief for victims of identity fraud, and updating agency processes.
Prior to the most recent funding reductions, the initial $79.6 billion plan only allotted $3.2 billion for taxpayer service and $4.8 billion for the modernisation of business systems. The remaining funds were designated for support of operations and enforcement.
At the annual convention of the American Institute of Certified Public Accountants in early June, Collins said, “If they can solve their IT and the service aspect, we’ll require less on the enforcement side.
The IRS’s funding was reduced by $21.4 billion from the initial $79.6 billion as part of the debt ceiling agreement, but the White House insisted that it didn’t anticipate any significant changes to the IRS’ plans as a result.
Nevertheless, there are funding issues, depending on future regimes’ budget objectives.
In the next three to five years, Collins predicted, “I believe the IRS will make significant progress in assisting taxpayers comply with their tax obligations as painlessly as possible.” Collins made this prediction in the midyear report.