It's always "hurry up and wait" with the IRS

It’s always “hurry up and wait” with the IRS.

The Offer in Compromise (OIC) process is a perfect illustration of this point. If a taxpayer finds himself with a tax debt that he cannot pay, one of his options is to file an Offer in Compromise by which he offers to settle with the IRS for less than what he owes. But the IRS will require that the OIC be filed as soon as possible; in fact, the IRS collections department will be poised to levy income sources if the offer is not filed (or some other resolution entered into). It is important to inform Collections of your intention to file an OIC, but they will most likely give you a short due date by which to submit the paperwork.

Once the OIC has been filed, then the waiting begins. It commonly takes several months just for the IRS to assign an offer to be reviewed. Offer examiners have to keep an eye on their caseloads because once a case enters their inventory, they are required to move it along promptly.

When an offer examiner or offer specialist has finished reviewing the offer, things pick back up and the taxpayer has to stay on his toes. Once again, deadlines are given that, if missed, could mean the end of the road. During this period of review the deadlines are typically attached to the submission documents that are required to substantiate details in the personal financial statement.

Once all the information is in and a determination has been made, there is usually additional waiting. The case normally must be submitted to a manager for further review, and that can take some time.

With the coming sequestration and IRS staff furloughs on the horizon, it is likely that the contrast between the hurrying and the waiting will be more pronounced. The IRS has said that furloughs will not begin until after tax season — that’s when we can expect longer-than-normal waiting periods at all levels of the IRS as there will be fewer IRS employees on duty to help.

IRS Hopes to Answer 63% of Calls in 2013

image via thewashingtonnote.com

The Taxpayer Advocate Service (TAS) released its annual report to Congress today which focuses on a few main themes: tax code simplification/reform, increased funding for the IRS, greater safeguards against identity theft, and improved taxpayer service.

For anyone working in the field of tax relief, and for taxpayers who contact the IRS seeking to address their back tax debt, some of the most interesting statistics are related to taxpayer service.  The IRS has a notoriously poor customer service record, especially with regard to the phones:

  • IRS received over 100 million calls in fiscal year 2012 and 30% went unanswered
  • Average wait time was almost 17 minutes in FY 2012
  • IRS goal is to answer 63% of incoming calls in FY 2013, down seven percent from 2012

And these numbers tend to get worse year after year.  Obviously the decline in customer service is closely related to the reduction in funding to the IRS.  However, I don’t know how they can seriously set a goal of answering only 63% of calls.  What an embarassment!

International IRS Offices

US citizens and resident aliens must report their worldwide income, meaning income from all sources within or outside of the United States.  The IRS receives tax filings and payments all year round and from all over the world.  If you derive income from sources in either Frankfurt, London, Paris, or Beijing and happen to be working there too, you have the fortune (or misfortune if you have an unpaid tax debt) to have an international IRS office nearby.

I would normally not recommend dropping in at a local IRS office.  You can usually get what you need more quickly, and with less hassle, by using the IRS’ website or by calling and speaking with a customer service representative if you don’t have a tax attorney.  However, if I worked in one of these four cities, I might give the international office a try.  They are located inside the United States embassies (or consulate in Frankfurt) and I would bet they do not get a lot of foot traffic.  Be sure to check the hours of operation here because they vary office to office, or visit the individual offices for more information:

image via lib.utexas.edu

Frankfurt

London

Paris

Beijing

Letter Audit Process Nicer Now . . . But Not Faster

photo via work.chron.com

The number of IRS “correspondence audits” has risen sharply in recent years.  A correspondence audit is a type of tax audit that is handled in the following manner:

  • The IRS sends taxpayer a letter questioning something on his/her tax return
  • taxpayer responds by providing documentation that substantiates the figures on the original return
  • the IRS then closes the case without making changes to the return, OR
  • the IRS sends another letter asking for additional supporting documentation, OR
  • the IRS proposes a tax change based on the information received

If the taxpayer disagrees with a tax change, he/she may appeal the decision.  It is called a correspondence audit because it does not involve an IRS auditor banging on your front door.

Taxpayers naturally want to know what is going on with their case; whether or not their documents have been received, whether or not the documents they submitted are sufficient, ultimately whether or not their tax problem has been resolved.  And in the past, the IRS has been slow to answer these questions.

But recently the IRS has made efforts to improve the correspondence audit process by something called the “Intelligent Contact Management System.”  See TIGTA report.  ICMS allows taxpayers to speak directly with IRS audit representatives rather than leave messages (under the old system) that were not being returned.  However, even though taxpayers may be getting through to live operators and getting answers these days, the answer is still “not yet.”  The audit process is still as slow as ever.  TIGTA confirms in their report that ICMS will not do anything to actually shorten the correspondence audit process.

On a side note, it’s slightly presumptuous for the IRS to use the word “intelligent” in the name of one of its systems, dontcha think?

IRS Closing 43 Offices Across the Nation

image via joyfeldman.com

Yesterday the IRS announced that it would be initiating a massive “office space and rent reduction initiative” that will save taxpayers $17.2 million in rental costs during 2012 and even more the following year.  Employees aren’t being laid off — this isn’t a reduction in staff — it’s all about packing them in tighter by eliminating some offices and consolidating others.

The IRS is quick to point out that this initiative will not result in a decrease in customer service because none of the actual walk-in taxpayer assistance centers are going to be closed.  The IRS anticipates “minimal taxpayer impact.”  Ok, everyone recognizes that “minimal” does not mean “none.”  These press releases are carefully worded, and I think The Commish chose to hedge a little here because of course there is going to be at least some impact on taxpayers and their access to tax relief.

The truth is a vast majority of taxpayers contact the IRS by phone, not via the walk-in offices.  And what happens when you pack employees in like sardines?  Best case scenario is they get a little grumpy.  Interestingly, this office space reduction announcement came just one day after the IRS publicized a slackening of the rules related to the Offer in Compromise program (which will likely result in a moderate to severe increase in OIC filings).  I can’t imagine either of these changes were too popular among IRS personnel (“What!  More work AND less space?!”).  I support the office space consolidation initiative 100%, I’m just skeptical about The Commish and his “minimal taxpayer impact” line.

www.mwattorneys.com

IRS Blunders

I knew it would be a mistake to call the IRS a couple of days before Tax Day, but I was already on the phone with the IRS and I really wanted to get some other things done.  One of my ancillary tasks that day was to request a 2011 tax return transcript for a client.  The first thing I noticed was the complete lack of urgency on the part of the IRS representative.  This is the busiest time of the year for the IRS, but I didn’t get a sense of that from this employee!  I spent nearly 30 minutes with this guy and all I wanted was a simple transcript.  I’ve had a bank levy released more quickly than that.

Eventually he informed me that the 2011 tax return had not been processed yet, so there was no transcript available for 2011 and he would be unable to process my request.  I thanked him for his help and ended the call.

Then, to my surprise, today I received the transcript in question via U.S. mail — it is a two-page letter.  The first page contains standard information about what a transcript is and is not.  The second page shows the taxpayer’s social security number as well as the tax form and tax period in question.   And where the details would normally go, there is the simple phrase: “No record of return filed.”

I didn’t ask for this.  We both agreed that the transcript was not available yet.  But somehow I received a completely unnecessary two-page letter.  That’s the IRS for you…

IRS Seeks to Cut Spending with Employee Buyouts

The National Taxpayer Advocate released its annual report to Congress earlier this week. Their top complaint is that the IRS is severely underfunded, which is causing a number of problems, including an erosion of customer service and a dwindling of taxpayer rights.

One way the IRS is dealing with a smaller budget is by offering early retirements and employee buyouts. This practice really illustrates the IRS’ dilemma. The more seasoned, higher-paid IRS employees are the only ones being offered buyouts because they are the only ones that qualify for early retirement, and the IRS can make a bigger dent in their payroll by shedding tenured employees. So the IRS will be losing some of their best people and filling empty spots with new employees. I know that the TAS is of the opinion that the problems at the IRS are primarily due to them being understaffed, but I have to believe that part of it is due to a large number of new employees who are still learning their job duties.

It seems like a lose-lose situation for the IRS. Under current budget constraints, if they keep their seasoned employees then they can’t afford to hire enough staff. But if they allow them to retire early then they would be, in effect, trading their MVPs for rookies.

Avoid Calling the IRS in December

December is by far the worst time to try to communicate with the IRS about your tax debt.

The Second-Stringers

I have not noticed that the telephone wait times are much different in December. Perhaps there are more IRS representatives taking vacation in December, but many practitioners and taxpayers do the same — so increased phone traffic is not normally an issue. The IRS does a fairly good job replacing the vacationers, but I have usually found the quality of their replacements to be lacking.  If you call the IRS in December (especially late December) then there is a good chance you will be dealing with a new, inexperienced IRS agent (a “second-stringer”). Of course, a tax relief attorney will know how to use that inexperience to the taxpayer’s advantage.

IRS Computer Maintenance

The IRS information technology staff takes advantage of the holidays to do routine maintenance on IRS computer systems. And they like to get a jump on things. So, if they tell you that everything is going to be shut down on Friday in observance of Christmas, then chances are they will be up and down all day on Wednesday and completely offline by early afternoon on Thursday.

If you get through to a representative who tells you their computers have been up and down, then it might be best to put off the call for another day if possible. The problem is that you will get partway through your call and everything the representative did will be lost when the computer goes down, and you’ll have to start over again.

If you have a tax issue that can’t wait until after the holidays, it is best to enlist the help of a qualified and experienced tax professional.

www.mwattorneys.com

IRS Customer Service Audit

The two things you can be sure of in life are, as the saying goes, death and taxes.  As for the taxes, they are apparently unavoidable on many different levels.  If it’s not the payment of taxes, it’s the waiting on hold with the IRS to get answers to your tax questions.  It has become a fact of life and, as a tax relief attorney, I think I have accepted it.

Wanna see what I’m talking about?  Click here for IRS phone numbers.  Enjoy!

The average wait time has increased every year since 2007.  According to a recent TIGTA audit, IRS average telephone hold times were up to 10 minutes during the 2011 filing season.

During that same timeframe, the IRS achieved a 74.6 percent level of service. Doesn’t sound too impressive until you realize that their goal was 71 percent. So, yes, the IRS surpassed its goal, but you’re probably wondering why they are not setting their sights a little higher.  Well, the answer given by TIGTA is the same tired old problem of limited resources and increased demand. And what exactly is the “level of service” measurement anyway? It’s actually a comparison of the total number of taxpayers who attempt to call the toll-free telephone lines (a whopping 80 million during the 2011 filing season) and the number of taxpayers who actually gain access to the system and are placed in the IRS queue. Certainly a big percentage of the callers hang up before connecting, I know I have more than once.

One bright spot, in my opinion, is the “Estimated Wait Time Message” feature that was implemented for the first time a few years ago. What this does is it helps me to decide if I want to hang up and try again when the call volume is lower. It is actually very helpful, and I have noticed that the estimates are usually pretty accurate.

Nobody likes waiting on hold, but if you consider the massive volume of calls that come in to the IRS each day, I don’t think it’s unreasonable to have to “take a number.”  I think the hold times would be even easier to swallow if, when you finally did connect with a representative, you were greeted by a somebody with solid customer service skills.  It’s the whole quality vs. quantity issue.  But I guess that’s for another day and outside the scope of this particular audit.