“It’s been an interesting four years, probably more interesting than some might have expected, including yours truly,” IRS Commission John Koskinen stated in what is likely to be his final press briefing before leaving office on November 12. Koskinen reviewed the IRS’s accomplishments under his four-year tenure and repeated his warning to Congress that the IRS is dangerously underfunded.
Koskinen Reviews IRS Accomplishments
“I’m delighted in what the agency has accomplished, even in the face of the challenges that we have faced,”Koskinen stated. He was particularly complimentary of the career employees at the IRS. He pointed to four areas that he believes were highlights of the agency that he has led over the past four years:
Smoother filing seasons
The last filing season was the most successful and smoothest running during his tenure, Koskinen reported.
Decreasing identity refund fraud
Since its peak in 2015, when taxpayer identity theft was at an all-time high, ID thefts dropped 46 percent during the 2016 filing season, and dropped another 40 percent during the 2017 filing season, through August. Koskinen pointed to the partnership with private-sector return preparation entities, as well as state tax departments, for the coordinated efforts that made that record possible. He observed that identity theft will continue to be a challenge for the IRS, and any organization with an online presence.
Improved taxpayer experience
Working with a tight budget and a baseline a few years ago when the wait time for telephone assistance by the IRS was at an all-time high, Koskinen reported that the Service has improved the overall “taxpayer experience” significantly. He pointed to a more robust website system for many more taxpayers to get their answers online, including the ability of taxpayers to create their own accounts. Nevertheless, he said that he recognizes the continuing needs of the 10 percent, or 15-million, taxpayers who still file on paper and prefer person-to-person contact with the IRS. In large part, because of the 90 percent of taxpayers working with online solutions, the wait time for other taxpayers on calls and to make in-person appointments has shrunk dramatically.
The IRS has no choice but to implement legislative mandates when they occur. Also, it is required to give them priority over taxpayer-service issues. In addition to the strain put on IRS resources by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), Koskinen mentioned the:
- Foreign Account Tax Compliance Act (FATCA) (P.L. 111-147);
- Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (ABLE Act) (enacted as part of the Tax Increase Prevention Act of 2014 (P.L. 113-295); and
- Protecting Americans From Tax Hikes Act of 2015 (PATH Act) (P.L. 114-113),
as additional responsibilities placed on the IRS during his tenure…without any appreciable increase in funding. With the ACA in particular, the lack of additional funding strained the IRS’s ability to provide other services. However, those who thought to undermine the ACA by not properly funding the IRS did not appreciate the Service’s general mandate to support any laws passed by Congress.
Upcoming Filing Season
In addressing the possible impact of tax reform legislation on the upcoming filing season, Koskinen stated that the IRS was prepared for any straight retroactive extension of as many as 30 pending extenders since programs were written in prior years to address the same extenders. However, if there are any substantive changes to those provisions, or if tax reform in general has more than a few provisions that are retroactive to the 2017 tax year, Koskinen could not promise that the upcoming filing season would go as smoothly. With changes that would impact the IRS’s “core systems,” he stated that Congress should be warned that the IRS would not be able to handle that challenge without additional resources, especially for IT work.
“If IRS funding continues to be cut, tax administration will fail…[it is] not a question of whether, but simply a question of when,” Koskinen warned toward the end of his final press briefing. If the IRS’s IT system fails, over $275 billion in refunds during each winter and spring could be in jeopardy, as would be entire the U.S. economy that depends upon that cash infusion every year, Koskinen stated.
Even without the major technology incident occurring sometime in the future, Koskinen predicted that the drop in the number of fulltime IRS employees each year is unsustainable. At some point soon, the audit rate will drop to a point at which there will be an unsustainable increase in noncompliance, as taxpayers cannot get the information they need to comply under the tax laws and as an increasing number of taxpayers feel that too many other taxpayers are noncompliant without consequences.
Koskinen did mention that he was encouraged by Treasury Secretary Steven Mnuchin’s statement that he would support an IRS budget that is “more rational and reasonable.” Nevertheless, Koskinen ended his farewell press briefing with a clear message that he does not want anyone to say “they weren’t warned” or that “IRS employees were not doing their jobs” if the system collapses as the result of underfunding.
George Jones, Wolters Kluwer News Staff