Taxable Talk

Yesterday, I called the IRS on behalf of a client. The client’s 2013 tax return was not processed correctly, so we had to file an amended return. The client received a CP503 notice demanding payment; however, we believe that she will actually receive a refund. It’s been four months since the amended return was received. It will likely be another four months before the issue is resolved…and it might be longer. The IRS put a 15-week hold on collection activities, so my client’s issue was resolved (for the moment).

But for the taxpaying public it’s gloom and doom this year when dealing with the IRS. IRS Commissioner John Koskinen sent a memo to all employees on Tuesday:

There is no way around the severity of these budget cuts without taking some difficult steps. Congress approved a $10.9 billion budget for us, which means we must absorb a cut of $346 million during the remaining nine months of the fiscal year. But that really amounts to a total reduction of about $600 million when you count another $250 million in mandated costs and inflation. This is the lowest level of funding since 2008, and the lowest since 1998 when inflation is considered.

In the memo, Commissioner Koskinen noted that there will be delays to IT work, less enforcement, and cuts in overtime and temporary staffing. For the public, interfacing with the IRS will get worse:

o Delays in refunds for some taxpayers. People who file paper tax returns could wait an extra week—or possibly longer—to see their refund. Taxpayers with errors or questions on their returns that require additional manual review will also face delays.

o Increasing correspondence inventories. We realize there will be growing inventories in Accounts Management, and taxpayer correspondence will face lengthy delays.

o Taxpayer service diminished further over the phone and in person. We now anticipate an even lower level of telephone service than before, which raises the real possibility that fewer than half of taxpayers trying to call us will actually reach us. During Fiscal Year 2014, 64 percent were able to get through. Those who do reach us will face extended wait times that are unacceptable to all of us.

What this means for you and I is that we have deadlines, but there’s none on the IRS. If you’re going to call the IRS, expect very lengthy hold times; yesterday I was on hold for 101 minutes before speaking with an IRS representative. I expect the hold times to get far worse as we head into Tax Season. If you’re sending mail to the IRS, you will be waiting for a response for weeks to months. Given the volume of mail, this will lead to more individuals mail not being responded to in a timely manner; this will lead to more Tax Court petitions being filed.

Back in December 2013 I sent a letter to the IRS on behalf of a taxpayer who had an issue with an electronic payment. I received the response to that letter last week. Humorously, the IRS had first said they lost my letter. (It was sent certified mail, return receipt, so I knew it was received.) This kind of delay is going to become the norm.

What can the taxpaying public do? First, don’t take out your anger with IRS employees; it’s not their fault. Almost all IRS employees do try their best. As Commissioner Koskinen said, “But I know firsthand the commitment and dedication you and your colleagues have to the nation and to taxpayers, and I know you will continue to do your best even as we are forced to do less than all of us want.” Yes, the IRS partially brought this on themselves with their obfuscating responses to the IRS scandal, but that has nothing to do with the rank and file IRS employees.

Second, document everything. If you mail something to the IRS, send it certified mail, return receipt requested. If you call the IRS, document who you spoke to (especially if the call relates to an examination/audit). At the beginning of any call with an IRS employee, they will state their name and badge number. You may need this information later.

Third, if you work with a tax professional get your paperwork to him or her early this year. This return season would have been challenging without the IRS issues; it will likely be one for the record books (and not in a good way). I expect my firm’s deadlines for clients to be applied to all this year.

Finally, be very patient. The IRS will eventually get back to you. If you have an issue and have to call the IRS, try first thing in the morning (especially if you live on the East Coast) or at the end of the day (especially if you live on the West Coast); avoid calling on Mondays.

I wish I had good news here, but the reality is that dealing with the IRS over the next few months will be a very unpleasant experience.

Tags: 2015.Tax.Season

This entry was posted on Wednesday, January 14th, 2015 at 7:58 am and is filed under IRS. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.