- The Washington Times - Thursday, March 7, 2019

The IRS is answering fewer than half of taxpayers’ phone calls so far this filing season and those who do get through are waiting longer to get answers at a time when taxpayers need them the most, the agency’s national taxpayer advocate said Thursday.

Nina Olson said that combining those problems with complications from the new tax law means the IRS would be better off waiving some penalties for certain taxpayers who are still adjusting to the new rules.

“The IRS started out behind, and it has had to work hard to try to catch up,” she said in testimony to House lawmakers.

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She said she’s concerned the IRS is “stretched so thin” that taxpayers may just give up trying to get questions answered.

The agency’s “level of service” has dropped to 48 percent over the first four weeks of the 2019 filing season. That’s down from 71 percent over a similar period last year. The average hold time has also increased from 10 minutes to 17 minutes.

Ms. Olson said the decline in the IRS’s telephone service “has almost surely been budget-driven,” pointing out that the agency’s inflation-adjusted budget is more than 20 percent lower now than it was in fiscal 2010.

The number of returns the agency has received and processed is slightly down compared to last year, and the IRS has issued fewer refunds — though the average refund of $3,068 is now $22 more than at the same point last year.

That dented Democrats’ recent complaints that the tax overhaul was actually raising middle-class Americans’ tax bills.

“Thus far, the IRS appears to be delivering the 2019 filing season as normal,” said Rep. Mike Kelly, Pennsylvania Republican.

Still, Ms. Olson said the new law is confusing some taxpayers used to the old rates, forms and tax breaks. She said she hopes the IRS does whatever it can to provide relief to those who unexpectedly owe more this year.

She said Congress waived some tax penalties for the first year after Congress passed a major overhaul to the tax code in 1986.

“I’ve been sort of advocating, why aren’t we in this first year doing what we did for 1986?” she said, noting that she might issue a directive to the IRS on the issue. “It’s just all the uncertainty … let’s get it right this first year, give them a break.”

The IRS has said taxpayers won’t be subject to usual underpayment penalties as long as they paid at least 85 percent of what they owed, down from the usual threshold of 90 percent.

But some Democrats have said that doesn’t go far enough for taxpayers who unexpectedly get hit with a bigger bill this year.

Ms. Olson acknowledged it took her three paychecks and several different methods to calculate the proper amount of taxes to withhold from her paychecks based on the new law.

“Now, I haven’t done my taxes so far this year so I will see whether I’m right or not,” she said. “It was just very complex to do that, and I’m pretty plain vanilla.”

Rep. Thomas Suozzi also said staff received data from the IRS saying that as of Feb. 21, there were 783,000 returns filed with errors that need to be resolved by an agency employee — a 200 percent increase from a year ago.

“This is not simplified,” said Mr. Suozzi, New York Democrat. “This is a calcified, sclerotic, broken operation.”

Ms. Olson said that is one area she is “monitoring like a hawk.”

“It’s a huge increase,” she said.

Ms. Olson also said that for taxpayers with simpler returns, the IRS’s new “postcard”-style Form 1040 should simplify the process, but that the new form is “likely to create more complexity” for others who might have to complete additional schedules.

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