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IRS Oversight Board’s Public Forum Focuses on Transforming Customer Service at IRS Through Technology; Budget and Human Capital Issues at Forefront of Quarterly Meeting

(Washington, DC) The IRS Oversight Board held its annual public forum on May 13th in Washington, DC, with this year’s theme, “Pivoting Away from Paper: How the IRS Can Overhaul Customer Service and Transform its Business Practices.”

IRS Commissioner John A. Koskinen opened the forum by thanking the members of the Oversight Board for the excellent work it does to support the IRS in an advisory capacity. “The role you play in helping the IRS fulfill its mission is more critical than ever, given the challenges we face,” said Commissioner Koskinen. He noted that the Oversight Board regularly provides the IRS with critical support and guidance in the area of electronic filing and tax administration.  

The Commissioner also discussed the IRS’ current budget situation, saying he shared the Board’s views expressed in its recently-released budget report, noting that “underfunding the IRS only punishes taxpayers and endangers the fiscal health of our nation and critical programs upon which Americans depend.”

The forum’s first panel consisted of experts from the United States Postal Service, the Social Security Administration, the Virginia Department of Motor Vehicles and the Council for Electronic Revenue Communication Advancement, with experience transforming customer service at the federal, state and local level. The panelists discussed successful customer service overhauls outside of tax administration; the strategies employed to realize the transformations; and lessons learned. They covered a wide range of topics including balancing customer service across channels and encouraging customers to use “digital first.”

Building upon this discussion, the second panel, which included representatives from the state revenue departments of New York and California, the Electronic Tax Administration Advisory Committee, the National Association of Tax Professionals, and the National Society of Tax Professionals, explored how the IRS can provide better service to taxpayers and tax preparers by leveraging technology to overhaul customer service across channels. Some of the topics covered during the session included comprehensive online services for taxpayers, providing data services for tax professionals, major roadblocks to pivoting away from paper processes, and balancing the funding for providing services today while investing in the future.

Board Chair Paul Cherecwich, Jr., who moderated the second panel, observed that “shifting customer expectations, combined with shrinking resources, factor most prominently” in the reasons that the private sector and government are shifting from paper to electronic transactions and communications. 

Written statements of all the panelists are available at http://www.treasury.gov/IRSOB/meetings/Pages/default.aspx

 

Highlights from Board’s Quarterly Meeting
The day after the Public Forum, the Oversight Board held its quarterly meeting, where it was briefed on a variety of topics by Commissioner Koskinen and his senior leadership team. Recently confirmed Deputy Treasury Secretary Sarah Bloom Raskin was also in attendance on behalf of the Secretary of the Treasury; this was her first Oversight Board meeting.

 

One of the most important issues discussed was the IRS budget. The IRS is currently being funded at levels just below the FY2010 levels and was one of a few government agencies not to see its funding restored to pre-budget sequestration levels.

 

Commissioner Koskinen was frank in his assessment of the implications of continued underfunding of the IRS. He stated that should the current budget environment prevail, the IRS would only be able to deliver a limited set of  core tax administration responsibilities, while continuing to  experience a decline in customer service and enforcement. The Commissioner assured the Board that IRS employees would continue to perform at the highest level but the agency had reached the limit of its ability to do more and more with less and less.

 

“One of the Board’s most important functions is to provide long-strategic guidance to the IRS,” said Board Chair Cherecwich. “However, providing this long sightline is becoming increasingly difficult given the continued uncertainty surrounding the IRS’ budget. We need to be able to say where we want the IRS to be 10 years from now but we are missing a key element in that planning, namely a steady and reliable funding stream,” he concluded.

 

Human capital is another major issue confronting the IRS. The Board was briefed on IRS attrition rates, including those for members of the Senior Executive Service. Retirements, reduced budgets and a hiring freeze since 2010 are cited as reasons for continued employee attrition. The IRS now has eight percent fewer employees to carry out its expanded portfolio of duties, including the aforementioned unfunded legislative mandates. Training has also been slashed during the past few years; since 2010, training costs have been reduced by 87 percent.  As a result, approximately 90 percent of training is now delivered online.

 

“The Board is deeply concerned by the state of training at the IRS,” observed Board Chair Cherecwich. “The IRS cannot build a highly talented, knowledgeable and proficient workforce without quality training; nor can it achieve its strategic goals. Inadequate training means that employees will struggle to provide quality service, which in turn, can result in additional burden on taxpayers and tax practitioners,” he concluded.

The IRS briefed the Board on its digital strategy, which is focused on how to structure IRS’ online customer service offerings with the dual goals of providing better service to taxpayers and delivering that service more efficiently. Among the online services described as being in the very early planning stages are approaches that would allow a taxpayer to securely log in to their account with the IRS and check his or her transactions in real time, such as filing status, payments and refunds.

The Board was briefed on actions that the IRS is exploring to foster improved competency with the tax preparation profession. Recent court rulings have determined the IRS lacks the statutory authority to regulate all paid tax return preparers.

The Board also heard about IRS’ ongoing effort to implement tax provisions contained in the Affordable Care Act, particularly on preparing for the 2015 filing season. The IRS will ramp up outreach efforts to communicate to individuals, employers, and insurers about their tax responsibilities under the Act.

The 2015 filing season will present other challenges as well, the Board learned. Approximately 66 tax provisions will expire this year, affecting 111 tax products. Late legislation in extending these tax provisions could have a detrimental impact on the 2015 filing season.

In addition to tax-related identity theft, the IRS faces many challenges in its efforts to reduce Earned Income Tax Credit (EITC) fraud, such as the lack of reliable third party data. The Board was told that the IRS is revising its EITC preparer-based treatment processes and pursing other strategies that it expects will improve EITC compliance.

Lastly, the Board was updated on IRS Enterprise Risk Management, including the implementation roadmap for the program.

The next meeting of the Board is September 16, 2014 in Washington, DC.

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