CCH Tax Day Report
The House Ways and Means Oversight Subcommittee examined the 2017 tax-filing season in an April 26 hearing. “The annual hearing is an opportunity to hear about the progress and challenges IRS has administering the tax code – and to learn what Congress may be able to do to help,” Chairman Vern Buchanan, R-Fla., said during opening statements.
According to IRS official Kirsten B. Wielobob, deputy commissioner for services and enforcement, the 2017 tax season has been a success. It has gone so well, in fact, that IRS Commissioner John Koskinen has said it is the smoothest filing season seen during his time as head of the Service, she noted.
“As of April 14 the IRS received more than 118.4-million individual returns. We issued over 8- million refunds for more than $246 billion, with an average refund of approximately $2,800,” Wielobob testified. “The smooth operation of the filing season is not automatic or accidental; it has been made possible because of the hard work and dedication of the IRS workforce,” she added, echoing Koskinen’s testimony before the Ways and Means Committee earlier in April (TAXDAY, 2017/04/07, C.1). According to Wielobob, the IRS is already preparing for the 2018 filing season.
However, Michael McKenney, deputy inspector general for audit, Treasury Inspector General for Tax Administration (TIGTA), testified that traditional IRS taxpayer services continue to be eliminated or reduced. “As of April 8, 2017, taxpayers had made approximately 44.6-million total attempts to contact the IRS seeking help to understand the tax laws…and the IRS reports that 16-million calls had been answered with automation, and telephone assistors had answered nearly 8.4-million calls,” McKenney testified. Overall, the IRS reports it has provided a 78.6-percent Level of Service, he noted.
Additionally, although the IRS reports having 376 Taxpayer Assistance Centers (TAC) walk-in offices, 24 of those are not open because they have not been staffed, according to McKenney. “The IRS estimates that the number of taxpayers it will assist at its TACs will continue to decrease this fiscal year,” he said. This results in a 23.6-percent decrease from fiscal year (FY) 2016, he added.
Private Debt Collection
Lawmakers also questioned IRS and TIGTA witnesses about the IRS’s newly implemented private debt-collection program through the use of four private firms (IR-2017-74 ; TAXDAY, 2017/04/05, I.2). According to McKenney, TIGTA is most concerned with the IRS’s lacking authentication process of ensuring taxpayers know they are dealing with the appropriate third-party debt collector, rather than a criminal. McKenney noted that, because there is such a high potential that criminals will use this new process to further implement scams, the IRS needs to strengthen their authentication process in regards to this new program. Additionally, TIGTA remains concerned that the IRS has no complaint panel, of sorts, in place for taxpayers to communicate grievances stemming from the program and private debt-collection agencies.
Oversight Subcommittee ranking member John Lewis, D-Ga., also expressed similar concerns, saying the program “makes no sense.” At the hearing, he announced that he is introducing the Taxpayer Protection Bill, which would repeal the program entirely.
Similarly, Rep. Earl Blumenauer, D-Ore., inquired, without much response, as to how the program was different “this time around” after two failed previous attempts. According to Blumenauer, the program is “an open invitation to scams.”
Identity Theft Refund Fraud
From the beginning of 2017 through March 22, the newly phased-in Return Review Process (RRP) has selected approximately 631,000 potentially fraudulent tax returns claiming approximately $4.7 billion in refunds, Wielobob testified. She credited the RRP for helping to block false returns in addition to the collaborative work of the Security Summit Group, a partnership between the private and public sectors to combat refund fraud (TAXDAY, 2016/11/04, I.1).
According to TIGTA, the IRS is making progress in its efforts to prevent identity theft refund fraud. Despite its improvements, however, “TIGTA also found that the IRS is not using data that it has readily available to proactively identify potential business identity theft,” McKenney testified.
Blumenauer, however, commented on the IRS’s reduced resources and personnel. “I appreciate people holding the IRS accountable, but Congress has dramatically reduced funding,” he said. “We, as Congress and this committee, have not done a very good job into diving in to try and understand how we equip this agency—we have made their task much more difficult,” he added.
By Jessica Jeane, Wolters Kluwer News Staff
Ways and Means Press Release: Buchanan Opening Statement at Oversight Subcommittee Hearing on the 2017 Tax Filing Season
Ways and Means Press Release: Ranking Member Lewis Opening Statement at Oversight Subcommittee Hearing on 2017 Tax Filing Season
Written Testimony of Kirsten B. Wielobob, IRS Deputy Commissioner for Services & Enforcement
Testimony of Michael E. McKenney, TIGTA Deputy Inspector General for Audit
GAO Testimony—2017 Filing Season: New Wage Verification Process Holds Promise but IRS Faced Implementation Challenges, Statement of Jessica Lucas-Judy, Acting Director, Strategic Issues (GAO-17-525T)