The Internal Revenue Service's new commissioner, Danny Werfel, lauded the agency's performance this tax season, thanks to the extra funding from last year's Inflation Reduction Act.
"This marks a special time for the nation with the arrival of the tax-filing deadline," he said during a press conference Monday. "This was a big year for the IRS in many ways. The agency really had its hands full during the pandemic, handling three rounds of stimulus payments and many other changes needed to support our country and our fellow citizens. This is really the first tax season we've had since 2019 where the IRS and the nation were on normal footing, so this was a test of the IRS, and I'm pleased to report that the IRS delivered a solid 2023 filing season by any measure. You can see this progress in every aspect of our operations. The IRS stepped up to help taxpayers in many different ways this tax season. The IRS has answered more calls from taxpayers seeking our help, provided more in-person assistance and offered more online."
On Monday, the Treasury Department delivered a kind of
Due to the 5,000 new hires made possible by the Inflation Reduction Act, IRS customer service representatives answered more than 6.5 million taxpayer calls this year, 2.4 million more calls with live assistance since the start of the year through April 7, compared to the same period in 2022. The IRS added new technology features like customer callback options, which will be available for 95% of taxpayers calling for toll-free live assistance by the end of July 2023.
The IRS achieved an 87% level of service this year, exceeding Treasury Secretary Janet Yellen's goal of 85%. The agency also reduced phone wait times to four minutes from 27 minutes, served 100,000 more taxpayers in-person, digitized 80 times more returns than in 2022 through the adoption of new scanning technology, cleared the backlog of unprocessed 2022 individual tax returns with no errors, launched two new digital tools, and enabled a new direct-deposit refund option. That represents a big improvement over last year, when the IRS hit just a 15% level of service to taxpayers and millions of refunds were delayed for months.
"This tax day marks an important milestone at the IRS," said Deputy Secretary of the Treasury Wally Adeyemo during the press conference. "Thanks to the Inflation Reduction Act resources, we have dramatically improved services this filing season. IRS employees have shown that when they have the resources, they will provide the services they've always wanted to provide to American taxpayers. Under the vision detailed in the strategic operating plan, taxpayers will be able to seamlessly interact with the IRS in the way that works best for them: on the phone, in person and online. This filing season, the IRS has made great strides in all three areas as shown through the brand new data we're releasing today. First, the IRS has achieved an 87% level of service, exceeding Secretary Yellen's ambitious goal of 85%. It's important to remember how this stacks up to last year, when we were able to perform at less than 15%. IRS customer service representatives answered 2 million more calls and cut waiting times by 85% this year. We've cut it down to four minutes from 27 minutes. That's better than most companies can achieve. Factoring in taxpayers served by automated phone applications, the IRS actually achieved a 93% level of service."
He noted that the IRS has also reopened its in-person Taxpayer Assistance Centers across the country. The Treasury said on its "report card" that the IRS hired hundreds of new TAC employees, with 335 TACs open this filing season, including 17 new or newly reopened TACs that closed last year. The IRS served 428,000 taxpayers in-person as of March 31, 107,000 more taxpayers than during the same period last year. Approximately 92% of TACs were open as of early April, and several are scheduled to open in the coming weeks. The IRS also hosted Taxpayer Experience Days in more than 100 TAC locations to provide in-person help on Saturdays.
The IRS has also expanded its digitization initiative to eliminate the backlog of paper tax returns. The IRS has expanded scanning to some of the most commonly used tax forms — Forms 1040 and 941 — and has scanned 10,000 as of April 13. The IRS is on track to scan millions of returns this year. Thanks to the extra funding from the Inflation Reduction Act, the IRS scanned 470,000 940 forms as of April 13. In the first quarter of the year, the IRS scanned 80 times more returns than in all of 2022.
Online services have improved efficiency in other ways as well. "Taxpayers are now able to respond to notices online," said Adeyemo. "They also have a new online filing option: the new direct deposit refund option. Until this tax season, when taxpayers received notices for things like document verification, they had to respond through the mail. Taxpayers are now able to respond to nine of the most common notices for credits like the Earned Income Tax Credit, saving them time and money. Under the strategic operating plan, the IRS will expand this tool to allow taxpayers to respond online to 72 of the most common notices they receive in the mail. This will make it significantly easier for individuals and small businesses to resolve issues and get their refunds in a timely manner. The IRS also launched an online portal to allow businesses to file 1099s electronically. These forms previously needed to be submitted through the mail. Small business owners often prepare their own taxes rather than hire professionals, and this new tool is saving millions of small business owners time and money."
He noted that in the first five years of the 10-year strategic operating plan, taxpayers will be able to securely file all documents and respond to all notices online and securely access and download their data and account history.
"The new notice and 1099 tools show how the IRS is making progress toward that goal," said Adeyemo. "In addition to service upgrades, the IRS has made major gains in its efforts to eliminate paper backlogs through scanning. The IRS has digitized 480,000 990, 941 and 1040 forms to date through the adoption of the new scanning technology, 80 times more forms in the first quarter of this year than in all of 2022."
He predicted that in the first five years of the 10-year strategic operating plan, the IRS will eliminate the paper backlogs that have delayed taxpayer refunds and transition to a fully digital correspondence process.
Werfel pledged to help taxpayers more with the extra funding. "Just like during the pandemic, IRS employees worked very hard again this year to help taxpayers, but this time they had help, thanks to funding Congress provided under the Inflation Reduction Act," he said. "These resources made a remarkable difference for taxpayers. This funding allowed us to hire more than 5,000 additional phone assistors, which led to a phone level of service averaging 87% during the filing season. This was a dramatic improvement from last year when those figures came in at under 15%."
He pointed to the reduction in the average wait time on the phone from 27 minutes last year to four minutes this year. "Our customer service representatives have provided assistance on more than 6.5 million calls this year, up from just over 4 million last year," said Werfel. "That means with our additional funding, we helped 2.4 million more taxpayers this year than in 2022. By anyone's measure, our phone service for taxpayers and tax professionals made a quantum leap this year. With the additional funding, we also increased our face-to-face assistance with our Taxpayer Assistance Centers, helping 474,000 people this year, more than a 30% jump from a year ago. And we continue to add staff and reopen Taxpayer Assistance Centers at many locations around the country. We've reopened 16 of these walk-in locations this year, and added one new location and hired 450 new staff, with more to come. Even our volunteer tax preparation services improved. We've had 2 million tax returns prepared under the VITA and TCE [Volunteer Income Tax Assistance and Tax Counseling for the Elderly] program, a jump from less than 1.6 million a year ago. All of this occurs, as the IRS continued to reduce its backlog of tax returns and correspondence from the pandemic. This work did not slow our 2023 filing season operation. We received more than 100 million tax returns through April 7 and refunds rolled out quickly. So far the IRS has delivered more than 69 million tax refunds with close to $200 billion to taxpayers."
