TIGTA recommends improvements for service to underserved, underrepresented, and rural communities

In a recent report, the Treasury Inspector General for Tax Administration (TIGTA) examined the Inflation Reduction Act’s Strategic Operating Plan (SOP) to serve taxpayers, professionals, and the tax system. TIGTA identified several opportunities for improvement for service to underserved, underrepresented, and rural communities.

Background: Congress enacted the Taxpayer First Act (TFA), P.L. 116-25, in 2019 to improve the way the IRS enforces laws, treats taxpayers, and trains employees. As a required component of the TFA, the IRS developed a comprehensive customer service strategy. A major piece of this strategy entailed serving taxpayers in underserved communities, which the IRS acknowledges is a critical piece of a voluntary tax system.

In August 2022, Congress passed the Inflation Reduction Act, P.L. 117-169, which provided $80 billion in additional funding for the IRS through September 2031 (later reduced by more than $20 billion). The act’s goals included modernizing IRS technology, providing better service to taxpayers, and enforcing tax laws. Related to the act, the IRS published its SOP for accomplishing these goals (IRS Publication 3744, Internal Revenue Service Inflation Reduction Act Strategic Operating Plan). Objective 1 of the SOP focused on improving services to help collect taxes and helping taxpayers claim tax incentives for which they are eligible. This objective includes improving customer service, as well as improving and expanding services for low-income taxpayers such as Low-Income Tax Clinics (LITCs), Volunteer Income Tax Assistance (VITA), Tax Counseling for the Elderly (TCE), forums, and webinars.

Shortly after the passage of the act, in May 2023, TIGTA recommended that the IRS work to define and identify various underserved communities and to develop agencywide strategies to improve programs, products, and services in these communities (TIGTA Rep’t No. 2023-15-027, Services to Underserved Communities Have Been Ongoing; However, an Agencywide Strategy Has Not Been Developed (May 31, 2023)). These efforts include the Lifting Communities Up program for providing jobs and careers to individuals in underserved communities and creating additional IRS offices in these communities (TIGTA Rep’t No. 2024-IE-R012, Actions Need to Be Taken to Ensure the Success of the Lifting Communities Up Initiative in Expanding Services and Assistance to Taxpayers in Underserved Populations (May 1, 2024)).

Results of review: As a result of the review of the IRS’s SOP, TIGTA found that the IRS offers several options for providing face-to-face services to underserved taxpayers:

• Taxpayer Assistance Centers (TACs) (including centers for taxpayer assistance in six Social Security Administration (SSA) sites where there is not a TAC);
• VITA and TCE; and
• LITCs.

The SOP includes two projects for increasing service to underserved, underrepresented, and rural communities: (1) expanding service offerings across multiple service channels to meet the needs of taxpayers and tax professionals and (2) enabling equal access through equitable practices (e.g., accommodations for people with disabilities and limited English proficiency, meeting the needs of rural communities and small business, etc.). However, as reported in the May 2023 TIGTA report, the IRS has not defined what an underserved taxpayer is, and responses to this question vary depending on the IRS business unit. While IRS management noted it would undertake the steps in the SOP to serve these communities, it has still not taken steps to define these communities.

TIGTA provided the following recommendations to the IRS:

Recommendation 1: The IRS chief taxpayer experience officer should identify the demographic characteristics of underserved, underrepresented, and rural taxpayers for use across the entire agency. Once defined, this information should be distributed to all IRS divisions working to enhance access to and availability of customer service options.

IRS management response: The IRS accepted this recommendation and stated that it will develop a document outlining the demographic characteristics of underserved and/or underrepresented taxpayers, which will be shared with all IRS divisions working to improve access to and the availability of customer service options.

Recommendation 2: The IRS chief taxpayer experience officer should ensure that existing datasets are utilized when identifying the population of underserved, underrepresented, and rural taxpayers after the demographic characteristics for these groups have been defined.

IRS management response: The IRS agreed with this recommendation and stated that it will identify current datasets to use when identifying the population of underserved, underrepresented, and rural taxpayers once the demographic characteristics have been defined for these individuals, and create a report that lists them for reference. The report will be shared with the business operating divisions and outreach functions.

Expanded services to underserved taxpayers as part of the SOP include the following: (1) more Saturday services at select TACs; (2) community assistance visits to locations without easy access to TACs; (3) rural partner action days; (4) web service delivery; and (5) voice and chatbots using artificial intelligence.

Recommendation 3: The chief taxpayer experience officer should create a detailed communication strategy that involves collaborating with local resources to educate taxpayers about the available customer service assistance options and how they can access these services.

IRS management response: The IRS accepted this recommendation and stated that it will create a communication strategy that involves partnering with local resources to inform taxpayers about available customer service options and how to access them. The plan will be shared with the business operating divisions and outreach teams.

In a 2019 report, TIGTA found that the IRS developed a Geographic Coverage Model (GCM) to identify optimal locations to expand face-to-face services to taxpayers (TIGTA Rep’t No. 2019-40-029, The Internal Revenue Service Did Not Follow Congressional Directives Before Closing Taxpayer Assistance Centers; a Data-Driven Model Should Be Used to Optimize Locations (May 8, 2019)). However, this model was found to not be in use; when asked, IRS management said it was not being used because budget limitations prevented the Service from expanding face-to-face customer service. IRS management further stated that the GCM is not the main driver, nor should it be, for expanding face-to-face service to new locations.

TIGTA recommended that the IRS utilize this GCM in accordance with its SOP goals of expanding service to underserved communities. TIGTA also noted that it may be more economically efficient to utilize SSA space as the IRS did prior to the COVID-19 pandemic, as doing so would save the federal government money on office space.

Recommendation 4: The IRS should assess the use and flexibility of the GCM to identify areas that would benefit from expanding services to underserved taxpayers.

IRS management response: The IRS agreed with this recommendation. The Taxpayer Experience Office will collaborate with the IRS offices of Research, Applied Analytics, and Statistics, as well as Facility Management and Security Services, to use geospatial data to identify up to 50 potential locations that could benefit from expanded services for underserved taxpayers. The findings will be shared with the Customer Assistance, Relationships, and Education offices.

Recommendation 5: The IRS should analyze whether it would be advantageous to expand opportunities for shared space with the SSA or other federal or state agencies, such as the U.S. Post Office or state departments of motor vehicles, particularly in areas where in-person taxpayer services are not available and the nearest location is more than 100 miles away.

IRS management response: The IRS agreed with this recommendation and stated that it will perform an analysis to determine the appropriate next steps.

Summary: Collectively, the report offers meaningful recommendations as to how the IRS can better accomplish its SOP. IRS management agreed with these recommendations and is working to implement changes.

■ TIGTA Rep’t No. 2024-IE-R014, Opportunities Exist to Improve Taxpayer Service to Underserved, Underrepresented, and Rural Communities (June 25, 2024)

— Thomas Godwin, CPA, CGMA, Ph.D., and John McKinley, CPA, CGMA, J.D., LL.M., are both professors of the practice in accounting and taxation in the SC Johnson College of Business at Cornell University. Isaac Chasen is a law student in the Cornell Law School at Cornell University. To comment on this column, contact Paul Bonner, the JofA‘s tax editor.