Where the IRS is headed and What it means for taxpayers, Part 1

I read the IRS Tax Payer First Act – First Report to Congress, January 2021 so that you don’t have to do it.  Here are some thoughts about what the future looks like as the IRS tries to figure out what the next 2-10 years look like…

The IRS is headed toward self-service.

Expanding Digital Services is part of their plan to be Taxpayer focused. The pandemic has accelerated adoption of some new technology like digital signatures which can be a good thing for tax professionals. I do not think “enhanced mobile and online experiences” are going to be live up to the hype.

On one side, the relationship between taxpayer and IRS is similar to the relationship with a primary care doctor. You see them once a year and hopefully, there are no issues. The other side of the equation is one where the taxpayer’s problems are protracted. In a prolonged medical situation, lots of time and attention is required.

Enhanced mobile or online experience won’t cut it.

The January 2021 TFA Report to Congress boasts that 122 million refunds were issued. This is staggering number – in size and achievement. Yet, only 2 pages later, they mention the “Where’s My Refund” application handled 368.8 million inquiries. So, if you’re the average taxpayer, you visit irs.gov, 3 times after filing your tax return looking for your refund.  That hardly seems like progress.

Have a well-operating computer or newer model smart phone or else

On your individual account, the IRS is proposing a secure two-way messaging system. If you ever chatted with a friend via phone or a company through their chat function, there are limitations to this method of communication. The IRS is also exploring other innovations such as “AI chat” function where a computer tries to figure out your question and answer it without human intervention. Not to belabor the medical analogy but problems with the IRS are sticky and require time and attention. Two-way secure chat does not inspire a taxpayer to believe that attention will be paid to your tax issue.

The report also mentions secure document exchange. If you’ve ever interacted with someone exchanging documents via phone or computer – it can be frustrating affair. Images are too small, blurry, illegible, etc. Image quality is affected by light, lack thereof or camera resolution. Sometimes basic unfamiliarity with a computer’s file system presents substantial technical challenges for many users. The high tech solutions from the IRS will never address that gap in knowledge. If you don’t have a well-managed computer or recent model smart phone, these novelties will simply be out of reach.

Many people will get frustrated with the “Do It Yourself” approach that the IRS is informally advocating. This will force taxpayers to seek the assistance from tax professionals or at least other people who can navigate the technological changes at the IRS. Nina Olsen, former National Taxpayer Advocate foresaw this and warned the IRS about it in her last interview before retiring. Vulnerable communities i.e. those who are older, living in rural areas and who don’t have as available access to broadband internet would certainly suffer under these changes. Yet, the IRS is pressing on.

If you find yourself worried about these changes and want to work with a tax professional that will answer your telephone calls and mail you documents through the US Post Office but who knows enough about technology at the IRS to help you fix your problem, call me at 312-529-5009. 

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