Friday, January 8, 2010

IRS Is Overburdened

Just in time for the filing season comes this report from the National Taxpayer Advocate:
An expanding slate of duties is stretching the Internal Revenue Service too thin, leading to poor customer service and undermining its ability to collect taxes owed, a government watchdog warned Wednesday.

The IRS's goal of responding to 71% of taxpayer calls in 2010 is "unacceptable," said Nina E. Olson, the National Taxpayer Advocate, in her annual report to Congress.

"In other words, the IRS is planning to be unable to answer about three of every 10 calls it receives," she wrote. Ms. Olson identified the IRS lack of responsiveness to telephone calls as the number-one problem currently facing taxpayers.

She also said the IRS lacks a successful strategy for collecting debts owed. One key problem is that the IRS uses an automated system to file liens against taxpayers, even when there are no assets for the lien to attach to and little chance of collecting the debt, Ms. Olson wrote.

Another problem is a preference for correspondence audits, which can produce more errors than face-to-face exams, she said.

At the root of some of these problems, Ms. Olson said, is that Congress keeps piling duties on the IRS through temporary stimulus programs and new social programs administered through the tax code.

The IRS is tasked with an impossible, thankless job. I'll be the first to point out its many failures but I'd like to see aany other massive government agency that has to carry out what it does - the enforcement of a labyrinthine tax code - half as well.


  1. You would think that an organization that has been around since 1862 would be a little better at its job. However, since the government that writes the tax code is the same government that runs astronomical, historical deficits and also runs the DMV, I guess the IRS I guess it could be worse.

    I think the answer might lie within the fair tax. I will admit I don't know enough about the fair tax to be an advocate, but I will go on record saying that it should be renamed "the simple tax."

  2. The tax system should be far simpler. (Forget the Fair Tax. Its supporters are being disingenuous and dishonest. It's a glorified sales tax that will cripple the economy and do very little of what it claims it will do.) You don't need a professional to help you pay your other taxes - property, sales, excise. Computing and paying your income taxes should be just as easy. But within the Tax Code lies power and there's no way you'll get politicians to give up any of that.

  3. How many clients would CPAs lose if the Tax Code were simpler?

  4. Probably a huge number. Most small to mid-size firms rely heavily on the revenues they earn from their tax compliance and tax planning services. A small price to pay, I say, in exchange for benefiting all of society. I'd be forced to increase my accounting and assurance (financial audits, etc.) services. I could do it.