Washington D.C. – The five-week government shutdown continues to hamstring the IRS’ ability to assist taxpayers because furloughed employees returned to massive backlogs of unopened mail and more complicated inquiries from taxpayers about the new tax law, according to an IRS watchdog report delivered to Congress today.
The National Taxpayer Advocate’s 2018 Annual Report documents the shutdown damage to an agency that has lost 22,000 full time employees and $715 million in funding since 2010.
“Today’s report brings into sharp relief just how difficult it is for an underfunded, understaffed agency to function at a high level when most of its workforce was locked out for a month before the start of the filing season,” said Tony Reardon, the national president of the National Treasury Employees Union. “I don’t know how anyone can read this report and not be alarmed at the massive amount of damage that has been done to the agency’s workforce and the taxpayers they want to serve.”
For example, on the day before the shutdown ended, the IRS had more than 5 million pieces of mail waiting to be batched; 80,000 responses to audits that needed to be addressed; and 87,000 amended returns that had not been processed.
The report also documents the diminished ability to respond to phone calls from taxpayers in late January and early February. Levels of service dropped up to 87 percent compared to the same time last year; average time to provide answers increased by up to 300 percent.
“Make no mistake about it, these numbers translate into real harm to real taxpayers,” wrote Nina Olson, the National Taxpayer Advocate, in the report.
About 88 percent of the IRS workforce was furloughed until the agency decided to call back about 36,000 more to prepare for the filing season. None of them were paid until a week after the shutdown ended on Jan. 25, three days before the start of the filing season.
The National Taxpayer Advocate’s report also found fresh evidence that the congressionally mandated IRS program to privatize federal debt collection is disproportionately affecting taxpayers who are financially vulnerable.
Olson has long cautioned against the use of private debt collectors to perform the work of the IRS and she, again, detailed the problems with the current program. So far in the 2018 fiscal year, the private collection agencies contracted by the IRS have generated 16 percent of the revenue that was originally expected, and 44 percent of the taxpayers who made payments to them were at or below 250 percent of the federal poverty level.
“With unacceptable frequency, the IRS (private debt collection) initiative as implemented continues to burden taxpayers who, according to IRS standards, cannot afford to pay for their basic living expenses,” the report states.
There is bipartisan support in Congress to keep lower income taxpayers from having their debts assigned to private collection agents, thereby allowing the trained professionals at the IRS to manage the hardship cases with more flexibility. But far too many of these cases have been handed over to the private companies so far.
NTEU has repeatedly called on Congress to cancel the private debt collection program, which has failed twice before to generate more money than it costs and has subjected vulnerable taxpayers to aggressive and unfair collection tactics.
“The report also shows the IRS’ own preliminary collection efforts on these cases actually resulted in more money for the U.S. Treasury than what was generated by private contractors, who are paid sizable commissions,” Reardon said. “Any program that wastes taxpayer money, lines the pockets of private contractors, and harms financially vulnerable families should not be allowed to continue.”
Finally, Olson complimented IRS employees’ response to the shutdown debacle.
“Most IRS employees experienced financial challenges as a result of missing two paychecks,” she wrote. “Yet when the shutdown ended, IRS employees returned to work with energy and generally hit the ground running, eager to make sure the agency could deliver the filing season as well as achieve its broader mission. The IRS faces many challenges as an agency – and this report documents many of them – but the dedication of the IRS workforce is a notable bright spot.”
NTEU represents 150,000 employees at 33 federal agencies and departments.