IRS urged to go more digital

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The technical glitches at the New York Stock Exchange and United Airlines, not to mention the recent hacking of the Internal Revenue Service’s “Get Transcript” online service, might tend to make people back off of technological solutions.

One tax advisory panel, however, thinks more online IRS access is just what taxpayers need.

Taxpayers increasingly prefer digital self-service to phone and paper methods, according to the Electronic Tax Administration Advisory Committee, or ETAAC. This all-volunteer group serves as the focal point for, as its name indicates, electronic tax administration issues.

“The IRS needs to transform its taxpayer service and compliance capabilities for efficiency through digital tools,” ETAAC members said in their 2015 annual report to Congress. “While the IRS is making progress to plan for the development of digital tools, the IRS needs to accelerate its strategy to overcome service shortfalls.”

Comprehensive and easy-to-use IRS digital service tools, says ETAAC, will reduce the taxpayer burden, increase compliance and improve taxpayer service.

TIGTA agrees, with caveats

Meanwhile, the Treasury Inspector General for Tax Administration, or TIGTA, agrees that technology improvements are crucial to future tax collection success and taxpayer satisfaction. The IRS watchdog office warns, however, that any expanded online options must be contingent on key technology and security upgrades.

“As taxpayers continue to be provided with the electronic products and services they desire to interact and communicate with the IRS, the risk associated with unauthorized access to tax accounts will continue to grow,” said TIGTA’s J. Russell George in a statement accompanying his office’s recent look into IRS electronic services.

“As such, completion of those technology projects that improve online service while mitigating the risks must be a priority,” George noted.

Continuing IRS money troubles

The recommendations of the two panels are no surprise to the IRS. The agency has increasingly turned to digital and online services in recent years, primarily to fill gaps in personal customer service that the agency says are the result of insufficient funding. The revenue shortage also affects digital solutions.

“Any proposed strategy must consider our limited funding and finite resources for high-priority information technology projects and other investments across the agency,” the IRS said in a statement in response to the TIGTA report.

Both TIGTA and ETAAC agree that money is a problem.

“The IRS also needs to closely collaborate with Congress to assess its investment decisions and allocate its resources appropriately,” notes the ETAAC report. “This will ensure that Congress invests in key areas necessary for long-term improvements to taxpayer service and compliance.”

Similarly, TIGTA’s audit found that additional IRS funding needs to be committed to fully complete the agency’s key information technology projects.

Congressional intransigence

But getting the dollars from Capitol Hill is easier said than done, especially since the IRS has remained in congressional crosshairs for the past few years. The Republican-led House and Senate have slashed the IRS’ budget as punishment for the agency’s handling of the Tea Party 501(c)(4) nonprofit status controversy.

Will Congress eventually loosen the purse strings so that the IRS can keep pace with the digital tax solutions that taxpayers demand? Under normal (as far as that word can be used in connection with Congress) circumstances, I’d say yes.

But with the IRS an easy target and the 2016 election year on the horizon, look for federal lawmakers to continue to punish the IRS financially in order to make political points.

Unless we taxpayers can persuade our representatives and senators to change their minds, we’ll just have to hope the IRS can cobble together the safe and useful digital solutions we want and need.

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