Fixing the IRS’s Troubled Customer Service
According to the White House, some 240 million individuals and businesses file tax returns every year. And help with those issues drives in millions of calls to the Internal Revenue Service (IRS).
Unfortunately, it is the IRS that is in need of help: for its customer service.
According to the National Taxpayer Advocate (NTA)’s 2021 report to Congress, the agency received a record 282 million calls in FY 2021, ending September 30, 2021.
Yet only 11% of calls, or just 32 million, reached contact center agents (which the IRS refers to as customer service representatives or CSRs) in that period.
Problems, Including Prior to Pandemic
The NTA leads the Taxpayer Advocate Service (TAS), an independent organization within the IRS which protects taxpayers’ rights, helps taxpayers resolve IRS problems with the IRS, and recommends changes aimed at preventing them.
The NTA report ascribed much of the blame for the IRS’s customer service woes to the COVID-19 pandemic, with factors including:
- Taxpayers were looking for answers as the IRS took much longer to process returns, thus delaying refunds for millions of taxpayers and causing financial hardships for some of them.
- Enactment of the American Rescue Plan Act in March 2021, issuing a third round of stimulus payments and extending a tax-free waiver on the first $10,200 of unemployment earnings that led to call spikes.
- Closure of the in-person Taxpayer Assistance Centers (TACs).
- Catch-up by the IRS in equipping workers that it had sent home with laptops and providing supporting infrastructure.
But the problems have long been there, exacerbated by years of what it called “subsistence-level budgets.”
The NTA’s 2022 Purple Book, which is published as a separate volume from the Annual Report, pointed out that the IRS budget has been shrunk by nearly 20% after adjusting for inflation since FY 2010. As a result, taxpayers had difficulty reaching CSRs. In FY 2019, the last full year prior to the pandemic, they “were not adequately served well over 40% of the time.”
The 2022 Purple Book also reported that the American Customer Satisfaction Index (ACSI) (see Chart 3) and the Forrester U.S. Federal Customer Experience “have consistently ranked the Treasury Department and the IRS the worst or among the worst performing federal agencies from a customer experience perspective.”
Chart 3: ACSI: FEDERAL DEPARTMENTS 2020
Yet when the pandemic hit, and despite what the NTA called the “laudable efforts of the IRS in general and CSRs in particular”, the overall level of service (LOS) for the full FY 2021 dropped to 21% from 51% in FY 2020.
The high call volumes created what the NTA Annual Report called a “vicious cycle” of poor service. That is because the IRS CSRs perform other tasks when available, such as correspondence, processing amended returns, and working paper cases.
“As taxpayer call volume increases, CSRs have less availability for these other tasks,” said the report. “In turn, this diminishes the IRS’s ability to be responsive to taxpayer needs in those areas, which causes processing delays…CSRs are so busy answering the phones that they are unable to deal with the incoming paper inventory, and the result causes even more phone calls as the paperwork stacks up.”
The long delays in reaching IRS CSRs have led to other service-worsening consequences.
The NTA said that some taxpayers and tax practitioners have hired vendors to auto-dial the agency: which further strains its phone lines, and which makes it more difficult for the average taxpayer to obtain service.
“Being able to call the IRS is a free public service that should be available on an equal basis,” said the NTA. “Paying to receive preferential access to the IRS should not be permitted.”
Causes and Solutions
The National Taxpayer Advocate attributes what it called the “historical inadequacy of phone service” to at least two principal causes.
1. Not enough CSRs.
2. CSRs lack a centralized Enterprise Case Management (ECM) system that would give them access to the taxpayer information they need to efficiently answer questions and resolve problems.
The NTA praised the IRS for seeking to make upgrades and innovations in areas impacting its traditional telephone service to provide better customer support for taxpayers, notably moving to a seamless omnichannel strategy.
The IRS’s Taxpayer First Act Report, sent to Congress in 2021, ID’ed tools such as:
- Automated callback
- Wait time transparency
- Concierge navigation support
- 360-degree view of taxpayer accounts
- Artificial intelligence (AI)-powered solutions including chatbots, appointment scheduling with IRS personnel, and employee assistants
The NTA report also called for an upgrading of videoconferencing capabilities at the TACs that handle taxpayer interactions that cannot be handled online or over the phone.
It suggested that the IRS move away from virtual service delivery (VSD), a taxpayer-facing technology available at limited TACs or partner sites. While helpful and secure, it nonetheless requires taxpayers to travel to a location other than their homes, thus limiting its utility in bridging the gap in face-to-face TAC service: effects that were exacerbated by the COVID-19 pandemic.
Instead the IRS should comprehensively adopt videoconferencing platforms, such as Teams, WebSD, or Zoom, thereby permitting taxpayers to use their own devices in their own homes. “This would greatly expand taxpayers’ ability to hold videoconferences with TAC employees and get the help they need,” said the report.
The NTA has a goal of an 85% LOS. To help achieve that objective and see other improvements happen it made several preliminary administrative recommendations for the IRS and a legislative recommendation for Congress.
For the IRS:
1. Implement and increase callback technology capacity across all taxpayer-facing telephone lines.
2. Prioritize the rollout of a comprehensive ECM system.
3. Implement flexible hiring and training strategies for CSRs to reach and maintain a mininum 85% telephone LOS.
4. Engage with outside parties to conduct a study to identify private industry or government best practices and how they might improve IRS phone systems.
5. Conduct a post-mortem study to identify specific challenges faced during the last two filing seasons to improve the responsiveness and quality of information provided to taxpayers and practitioners by telephone.
6. Conduct a pilot program for pop-up mobile TACs, with stakeholders and community partners, to travel to underserved communities and reach vulnerable taxpayers, to determine the viability and benefit of this program to taxpayers.
Provide dedicated multiyear funding sufficient to allow the IRS to improve the CX in general and telephone service, as described in the IRS Taxpayer First Act Report to Congress.
“[The] TAS applauds IRS efforts to provide systems and procedures that allow taxpayers to obtain the answers they desire without needing to speak with CSRs,” said the report in the Comments section. “This reduction in demand can, in turn, allow the IRS to focus on providing more timely and effective service to those taxpayers who do require assistance from CSRs.
“Key to this necessary improvement will be continued increases to CSR staffing, the planned expansion of customer callback to virtually all IRS phone lines, and technologies such as voicebots, chatbots, and videoconferencing platforms.
“For phone service to reach a level that adequately serves taxpayers, the IRS will need to stay the course and successfully implement these comprehensive plans it has developed and set in motion.
“Likewise, although funding is neither the cause of nor solution to all that ails IRS phone service, sufficient funding from Congress would prove invaluable in allowing the IRS to more quickly and comprehensively make the upgrades it has planned.”