The IRS has implemented changes to improve service even ahead of the $80 billion that it is receiving over 10 years from the Inflation Reduction Act, P.L. 117-169, and technology means other improvements are within reach if the new commissioner sets priorities and sticks to them, two former IRS commissioners said Monday.
The term of current IRS commissioner Charles Rettig expires on Nov. 12. Treasury Secretary Janet Yellen on Friday named Deputy Commissioner Douglas O'Donnell to be acting IRS commissioner after that date.
Charles Rossotti, an IRS commissioner during President Bill Clinton's and President George W. Bush's administrations, and Fred Goldberg Jr., commissioner under President George H.W. Bush, spoke at the AICPA National Tax Conference in Washington, D.C., on Monday.
Outgoing commissioner Charles Rettig said last week that the IRS has hired 4,000 customer service representatives and plans to hire 1,000 more. But hiring and training are just part of the equation, and the IRS's service issues require a "holistic solution," Rossotti said.
"You then have to drive it forward with the technology to make sure the people answering the phones have the correct data," he said. "If the paper return isn't processed, they're not going to be able to answer a question about what's on the paper return."
When National Taxpayer Advocate Erin Collins released her midyear report to Congress in June, she said the IRS received about 73 million phone calls during the 2022 filing season, with just one in 10 calls reaching an agency employee. She also said that as of the end of May, the IRS had a backlog of 21.3 million unprocessed paper tax returns, an increase of 1.3 million over the same time last year.
Goldberg pointed to self-help installment agreements that allow taxpayers to set up a payment plan — when both the IRS and the taxpayer agree on the amount owed — on the phone or online as one way the agency already uses technology to improve service.
"They've done it. That's real," Goldberg said. "And it is a kind of technology that the IRS is actively looking to deploy in other contexts."
It is, he said, "a happy story. It's an amazing story. You don't read about it. But it's there."
While much discussion about the $80 billion funding for the IRS has centered on the buckets where it will be spent — service vs. enforcement, for example — that is not as big an issue as it might appear, the two former commissioners said. For example, 70% of all audits are correspondence audits, Goldberg noted, but even with correspondence audits, "it's all about the service," he said. "Does somebody respond when you pick up the phone? Does somebody respond when you write a letter? Yes, that is compliance. It is classified as an audit. But that's all service. But it fits in the right bucket from the accounting standpoint."
As far as priorities for the next commissioner and the new IRS funding, "you have to choose," Rossotti said. "What's going to have the most impact the quickest. What do we have to do longer term? What do we do next? That's a normal process of managing in any large organization. And that's what's going to have to happen in the IRS. It doesn't make it easy. It's very difficult because you have a lot of trade-offs and everybody wants everything first. And some things are constrained by technology. Some things are constrained by training. They're constrained by politics. They're constrained by all kinds of things. But that's the decision that has to be made by the top leadership team."
That means "this program won't be successful until we get a confirmed commissioner that can bring all that together. It doesn't mean that he does it or she does it all by themselves," he said. "But somebody has to be there to set these priorities and bring these conflicting issues to resolutions."
The new commissioner "needs to set priorities, be clear about where he or she wants the system to go, and in what order," Goldberg said.
Rossotti issued an optimistic outlook for the future IRS:
"It absolutely should be a goal that whether it's through phones or other forms of communication that, if people need to communicate with the IRS, they can do that efficiently, they can do that quickly, and they can get the right answer. That is going to be a step-by-step process … and within a few years, it should be massively better than it is today."
— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com