The IRS has seen a “devastating erosion” of its ability to do its job, and the worst is yet to come after budget cuts have trimmed staff and the tea party targeting scandal has damaged the agency’s reputation, the government’s official National Taxpayer Advocate said in a report Wednesday, delivering the latest grim assessment of the agency.
Nina E. Olson, the advocate, said the IRS will hit “new lows” of service to taxpayers and will have to ignore a majority of the calls it receives from frustrated taxpayers. Those who do get through will wait an average of 30 minutes before they get help, and employees often will be unable to answer more complicated questions, she said.
Ms. Olson said blame lies with President Obama and Congress, who have cut budgets but haven’t kept pressure on the agency to keep up with its workload, and with leaders at the IRS, who haven’t set the right goals and priorities for their employees. She called it a “perfect storm” of problems that demands a major cleanup.
“Taxpayers who need help are not getting it, and tax compliance is likely to suffer over the longer term if these problems are not quickly and decisively addressed,” she wrote in the extensive report, which her office releases every year.
The chief problem is that the agency is handling more business, and its job is about to get even tougher with the first major round of Obamacare tax filings, yet the IRS budget has been cut 17 percent since 2010.
Squeezed resources meant the IRS ignored 36 percent of phone calls last year and virtually ended the ability of a taxpayer to walk into an office and get assistance with forms, the advocate said.
An even bigger problem is the “erosion of taxpayer trust” in the agency, which the advocate blamed in part on the tea party targeting scandal, in which the agency singled out conservative groups’ nonprofit status applications for special scrutiny. The advocate said funding problems can be reversed with more money, but squandered trust is not so easy to repair.
“Once lost, trust takes a very long time to be regained. For a taxpayer whose trust has been shaken, each IRS failure to meet basic expectations (e.g., answer the phone …) confirms the belief that the IRS is not to be trusted,” the advocate said.
She called for Congress to pass a taxpayers’ bill of rights as a first step to restoring confidence.
The IRS promised to give the report due consideration.
“The Taxpayer Advocate Service plays an important role in our nation’s tax system. We look forward to reviewing the report and discussing its recommendations with the Taxpayer Advocate,” the agency said in a statement. “The recommendations we have been able to implement in the past have helped improve taxpayer service and compliance.”
While IRS leaders come in for criticism, the taxpayer advocate lays an even greater share of the blame on Congress, which has trimmed the agency’s budget to the extent that it is struggling to meet growing demand.
At the same time, lawmakers aren’t doing the kind of oversight the IRS needs, the advocate said.
Ms. Olson said Congress needs to hold “nuts and bolts” hearings so lawmakers can understand the basic challenges the IRS faces, and to foster a sense of shared responsibility for the agency, whose success in collecting taxes will determine how much money the government has to spend.
She also criticized lawmakers who depict “the entire agency and all its employees as an out-of-control agency.” That is a wrong signal to send and erodes public trust, making the agency’s job even tougher, she said.
Bashing the IRS has been political fodder for both sides of the political aisle, but Republicans have intensified their criticism in the wake of the tea party targeting scandal.
Some conservative groups have been waiting years for approval of their nonprofit status applications, even though the IRS claims its targeting ended years ago.
Speaking at The Heritage Foundation this week, Sen. Ted Cruz, Texas Republican, said the Obama administration has engaged in “weaponization of the IRS.”
“In my view, there is a powerful populist instinct to take the 110,000 employees at the IRS, to padlock the building and to put all 110,000 of them down on our southern border,” Mr. Cruz said, though he added that was “somewhat tongue-in-cheek.”
He went on to call for abolishing the IRS and imposing a flat tax.
The taxpayer advocate, while not calling for a flat tax, did say Congress could help matters by simplifying the tax code.
That will be a major issue this week when House and Senate Republicans meet for a policy retreat in Pennsylvania.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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