The TIGTA report found that, while there are many services for underserved taxpayers, much of the assistance is underutilized. Cassidy / Getty Images
IRS services for underserved taxpayers are good but can be better, report says
While the IRS has focused on improving customer service for underserved taxpayers, TIGTA noted that the tax agency doesn’t currently have a definition for such taxpayers.
A watchdog report published last week offered new insights on how the IRS can better use the nearly $58 billion in funding from the 2022 Inflation Reduction Act to improve taxpayer services for underserved, underrepresented and rural individuals.
IRS announced last year that it planned to use some of the tens of billions of dollars provided to it under the IRA to enhance taxpayer assistance programs, especially through more customer service options for underserved taxpayers.
However the Treasury Inspector General for Tax Administration noted in its report that IRS does not currently have a definition for what an underserved taxpayer is. While IRS officials told investigators that they use different models to identify such taxpayers, the inspector general argued this practice has resulted in disparate definitions across the agency.
“The continued lack of a clear definition for underserved and underrepresented populations presents the risk that the IRS will not meet the objectives of the [Strategic Operating Plan] and as such, will not provide additional service where it is needed and to whom needs it,” investigators wrote.
TIGTA recommended that IRS denote the demographic characteristics of underserved, underrepresented and rural taxpayers as well as make sure that it is using up-to-date data when identifying those individuals. The report highlighted that the agency is using 2016 demographic data to determine the availability of taxpayer assistance centers for underserved and underrepresented individuals.
The inspector general also recommended that the IRS chief taxpayer experience officer develop a communication strategy to inform taxpayers about customer assistance programs available to them. The report found that, while there are many services for underserved taxpayers, much of the assistance is underutilized.
For example, investigators did not find any information on the IRS website about outreach events for rural taxpayers or the agency’s virtual assistance program. That being said, since the virtual service started in 2022, a total of 46 employees have helped more than 22,000 taxpayers.
The report further recommended that the tax agency consider using an existing model to aid efforts to locate places where expanded services would benefit underserved taxpayers and conduct an analysis of increasing opportunities to share space with the Social Security Administration or other federal and state agencies.
IRS has previously rented space from SSA to provide in-person services to taxpayers at six locations. TIGTA reported that such agreement cost the IRS only about $27,000 in fiscal 2018.
While there was a pause in the co-location program during the pandemic, the two agencies reached a new agreement to last from October 2023 through September 2024. However two out of the six locations are closed due to lack of staffing.
“Sharing office spaces could benefit both taxpayers and the federal government in underserved, rural areas where there are no current services,” according to investigators. “Taxpayers would not have to travel so far to obtain face-to-face service, and the federal government could save money on office space that is not being used efficiently.”
IRS agreed with all five recommendations and said it has plans to implement all of them by the end of calendar year 2025.