The IRS’ Slow Response to Taxpayer Letters Is Costing Everyone

The taxpayer correspondence inventory system at the Internal Revenue Service too often allows letters to go unanswered for extended periods, delaying refunds and sometimes causing the agency to pay extra interest to taxpayers, a watchdog found.

The “over-age correspondence” lists reviewed last year by the Treasury Inspector General for Tax Administration rose from 40 percent in fiscal 2012 to 49 percent in fiscal 2015, auditors said in a report dated Feb. 17 but released March 8. That percentage continues to rise.

“Delays in processing correspondence create a burden for taxpayers, who must wait to obtain assistance and, in some cases, receive refunds,” TIGTA wrote. “This was reflected in customer satisfaction surveys in which taxpayers indicated that they were dissatisfied with the length of time the IRS was taking to resolve their cases and to obtain information about their cases. For the IRS, delays in processing correspondence can result in the unnecessary payment of interest.”

The IRS in fiscal 2014 alone mailed more than 188 million notices and letters to taxpayers addressing taxpayer requests, amended returns, identity theft and duplicate filings. Correspondence is considered over-age if not resolved within 45 days. The agency scans all letters received into a correspondence imaging system and they are assigned to a customer service representative who must reply within 30 days, the audit explained. The response is required to be timely, accurate and written in plain language, while fully addressing the issues involved.

TIGTA’s review was performed at IRS campuses in Atlanta, Kansas City (Mo.), Philadelphia and Austin from February through October 2015.  It found that in fiscal 2014, the IRS shelled out more than $27.6 million in interest payments to taxpayers as a result of delays in correspondence that left cases unresolved.

The “over-age correspondence” problem has surfaced before, and auditors credit the IRS with having taken steps to improve monitoring of the process and make it more consistent to more rapidly resolve taxpayer cases. Yet “TIGTA’s analysis of eight customer service representatives’ over-age reports for three consecutive weeks identified that 16 to 82 percent of their over-aged assigned cases remained unresolved.”

The watchdog recommended that IRS managers provide and receive annotated over-age reports from their employees on a weekly basis. The IRS agreed.

(Image via Derek Hatfield / Shutterstock.com)