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National taxpayer advocate: IRS falling down on the job of helping identity theft victims

By Alistair M. Nevius, J.D.

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During some of the busiest weeks of tax season, less than one caller in 10 to the IRS’s Taxpayer Protection Program phone line was able to reach IRS staff for assistance, according to Nina Olson, the national taxpayer advocate, in her midyear Objectives Report to Congress released on Wednesday. And the average time that callers had to wait to get through was as high as 60.2 minutes, for the week of Feb. 7.

Olson reported that the Taxpayer Protection Program (TPP) stopped more than 3.8 million suspicious tax returns during this year’s filing season; however, 34% of those suspended returns turned out to be legitimate. At the end of May, the IRS had 671,773 identity-theft cases in its open inventory, a 69% increase from May 2014.

According to the report, stolen identity cases are the most common type of case that Olson’s Taxpayer Advocate Service deals with, which she attributes to the low level of service on the TPP phone lines and the high false positive rate for suspended returns.

Olson called for a single point of contact in the IRS for victims of identity theft: “Victims of such a traumatic event should not be bounced around from one IRS function to another, recounting their experience time and again to various employees” (Objectives Rep’t to Cong., vol. 1, p. 31). She also thinks the IRS should develop a method to track and resolve identity-theft cases more quickly.

The taxpayer advocate was also critical of the IRS’s goal of automating taxpayer service and issue resolution. Sending more taxpayers online to find answers ignores what taxpayer’s want, she said, and will increase taxpayers’ compliance costs. “[I]t is wishful thinking, if not foolhardy, to expect taxpayers to rely on computer-driven systems for resolution of tax problems that, if not resolved fully, could lead to devastating financial consequences” (Objectives Rep’t to Cong., vol. 1, p. 4).

—Alistair M. Nevius (anevius@aicpa.org) is the JofA’s editor-in-chief, tax.