Report Says IRS Lags in Service, Enforcement

The Internal Revenue Service, halfway through a decade of restructuring, still provides poor customer service and fails to enforce tax laws, said a board created to oversee the agency’s management.

“The IRS must work harder and smarter,” the IRS Oversight Board said in its annual report, presented to a House Appropriations subcommittee Wednesday.

The board blames some of the problem on Congress forcing the IRS to work under a tight budget. The IRS must handle many more returns, and increasingly complex returns, with less money. Over the last decade, the workload increased 16%, but the number of full-time employees decreased by the same percentage.

The report also said the IRS is not reforming itself as quickly as expected or desired, despite making significant progress in some areas.

Only seven in 10 taxpayers can reach an IRS employee through a toll-free number, a statistic the board called unacceptable.

Enforcement steeply declined during the last five years, particularly among corporations worth $10 million or more.

The tax agency cannot keep up with quickly growing categories of returns filed by mid-sized businesses and partnerships. With an adequate budget, the IRS estimates it can produce $30 billion of additional revenue each year.

IRS Commissioner Mark Everson testified that the agency cannot track down every tax dodger and backed a program to use private debt collectors to go after some unpaid taxes.

The board also said a program to transfer taxpayer records to computers is not proceeding as fast as it should, nor is it producing the expected benefits.

“Solving these problems requires more work than the IRS can handle,” the board said.

Everson said he wants to closely monitor a program under development in the Treasury to reduce erroneous payments to the working poor.