IRS Report Card Time


As the school year winds down, students always have one hurdle left – the dreaded report card. Yet students are not the only ones who dread report card time. Even the IRS gets one. In fact, they get two. The National Taxpayer Advocate Director Nina Olson submits two reports to Congress each year: the “Objectives Report,” which outlines goals and activities planned for the coming year, and the “Annual Report,” which identifies the 20 most serious problems encountered by taxpayers and provides recommendations for solving them. The report also includes other IRS efforts to improve customer service and reduce taxpayers’ burden.

This year’s Annual Report listed twenty–two problems, not 20. Their primary conclusion is that the IRS is simply “not adequately funded to serve taxpayers and collect taxes.” It identifies “the combination of the IRS’s expanding workload and declining resources as the most serious problem facing taxpayers.”

Granted, the IRS faces an especially tough challenge. The report notes, “There were approximately 4,430 changes to the tax code from 2001 through 2010, an average of more than one a day. The IRS must explain each new provision to taxpayers, write computer code so it can process returns affected by the provision, and train its auditors to identify improper claims.”

And there were other problems. The IRS adjusts about 15 million returns per year, but treats only 10% of those as “audits,” so taxpayers do not always get traditional audit process protection. And often the response time by the IRS is greatly affected by their workload. Current records show that the IRS is only able to answer 70% of taxpayer phone calls, and just 53% of written correspondence receives an initial response in 45 days or less.

The Taxpayer Advocate Director urges Congress to “develop new budget procedures designed to fund the IRS at a level that will enable it to meet taxpayer needs and maximize tax compliance.” She also suggests codifying a “Taxpayer Bill of Rights” to clearly outline and explain taxpayer protections and responsibilities.

The IRS is attempting to improve service by joining the social media scene, which include smartphone apps, a YouTube channel and podcasts. The goal, of course, is to prepare your taxes accurately and avoid IRS scrutiny. But just in case, we're always ready to deal with the IRS on your behalf and make sure you don't become another Annual Report statistic!