Going into the 2016 filing season, the IRS has additional monetary resources to improve customer service and cybersecurity along with curbing identity theft. The fiscal year (FY) 2016 omnibus spending bill approved by Congress and signed into law by President Obama in December, allocates $290 million above FY 2015 funding to the IRS with instructions of where to spend the funds: customer service, tax-related identity theft and refund fraud, and cybersecurity.
During the 2015 filing season, many taxpayers and tax professionals were very frustrated with customer service at the IRS. The National Taxpayer Advocate discovered that less than 40 percent of all calls to IRS customer service representatives were answered. The average wait time to speak with an IRS employee stretched past 20 minutes. Further, the IRS increased its use of so-called “courtesy disconnects.” That occurs when the IRS disconnects an incoming call because its phone lines are overloaded. According to the National Taxpayer Advocate, the IRS disconnected more than eight million calls from taxpayers during the 2015 filing season.
Lawmakers became aware of the customer service challenges at the IRS over the course of several hearings during 2015. IRS Commissioner John Koskinen and other officials said that the agency “had to do more with less.” Speaking in November, Koskinen said that without more funding, customer service would be worse in 2016.
The FY 2016 omnibus authorizes more funding for 1-800 help line services for taxpayers. Congress directed the IRS to make improving telephone service a priority and to enhance response times.
Tax-related identity theft occurs when a criminal uses the personal identification information of a taxpayer to file a return claiming a fraudulent refund. Typically, refund fraud occurs early in the filing season. The taxpayer files a legitimate return and discovers that his or her identity has been stolen.
In response, the IRS has continuously upgraded its processing filters to uncover fraudulent returns. The agency has also partnered with state tax authorities and private sector tax software vendors and launched public education campaigns about tax-related identity theft. The FY 2016 omnibus authorizes more funding to improve the identification and prevention tax-related identity theft and refund fraud.
In 2015, the IRS acknowledged that cybercriminals hacked its popular online Get Transcript app. The app enables taxpayers to obtain line-by-line return information. Criminals, the IRS explained, have used this information to file false returns that claim tax items similar to those items that taxpayers have claimed in the past and to generate fraudulent refunds. The FY 2016 omnibus appropriates more funding to enhance cybersecurity to safeguard taxpayer data.
If you have any questions about the impact of IRS’s FY 2016 budget, please contact your Warady & Davis LLP advisor at (847) 267-9600.