Home | One Tax Professional’s Viewpoint on the “IRS Army of 87,000 Agents”
Oct 31, 2022
Over the last few months, all political sides of the mainstream media have shared some information about the funds earmarked for the IRS in the Inflation Reduction Act. The key word there is “some.” I want to share a summary of the situation from the standpoint of a tax professional who has researched the bill and contemplated the needs of the IRS based on my interactions and experience with the agency while balancing that information with the services the IRS provides our Nation.
First, let’s consider what the IRS is and what it is supposed to produce on behalf of the United States of America. The IRS is a bureau of the Department of Treasury. Congress determines all tax laws that go into effect, and it is the IRS’ job to enforce those laws and collect the appropriate tax owed. Knowing that the IRS is responsible for these actions on behalf of our Nation and that those taxes are used to fund our country’s daily operations, this is an essential, though not well-regarded, arm of our Federal Government.
Here's my experience with the IRS and how it relates to the “87,000 IRS Army” everyone keeps talking about and hyping up:
Current Staffing Levels - Over the last ten years, the IRS has experienced significant attrition of its more senior employees: Revenue Officers, Collections Managers, Appeals Officers, Customer Service Agents, Offer in Compromise Specialists, etc. Due to funding limits, many of those losses were never replaced. Compounding the issue are two significant events that occurred in recent years: the 35-day government shutdown that began in 2018 and the COVID pandemic. During those two events, the IRS lost a swarm of its employees; as the funding was not there to fill the vacant positions, the strength of the IRS to be effective with its duties began to dwindle. For comparison, per recent Government Accountability Office and IRS Congressional Budget Justifications reports, in 2011, the IRS had 50,400 full-time-equivalent enforcement staff, and in 2021, that number had shrunk to 35,000.
Tax Return Processing Delays – Wow, 2021 was a doozy! When the IRS finished the 2021 filing season, they had a backlog of over 35 million returns that needed some manual handling to be processed. That backlog caused months of delays with deserving taxpayers waiting for refunds and taxpayers who couldn’t have pending resolutions finalized because they were waiting on tax returns to process.
Calling into the IRS – How many of you have called the IRS’ 1-800 line before the COVID pandemic? Remember how you sat on hold, depending on the time of day you called, between 20-60 minutes before someone answered? I wish that was still our reality! Now, when calling the IRS, we often can’t even get into the queue “because of a high caller volume,” and the call is disconnected. If you are lucky enough to pass the first hurdle and can get into the queue to speak with someone, you are typically on hold for at least 60-90 minutes. The biggest slap in the face when trying to call the IRS is if we can finally be accepted into the queue, and if you happen to be stuck on hold for more than two hours, the IRS’ phone system hangs up on you!!! Given that we often call the 1-800 lines at the IRS to secure new client liability information or to ask for a stay of all aggressive collection actions because we are working on a solution to the debt, this can be detrimental to our clients!
The Armed Agents – Every time I saw a social media post “sharing” that the IRS is arming 87,000 IRS Agents with guns and badges, I was shocked. This simply isn’t true. The only IRS Agents authorized to carry firearms are those working within the Criminal Investigation Division (CID)… and the reason is that they handle the nastiest and most egregious cases. Remember how Al Capone was finally “taken down”? It was over taxes, and the CID is the modern-day equivalent of who would be going after him in 2022. In my 23+ years of handling thousands of tax debt cases before the IRS, I can honestly say that I have only had four client tax accounts that were referred to CID for investigation… and one of those I was able to walk back to resolve with the Collections Department. When I reflect back on the other three? Yes, their actions justified the case being elevated to CID.
Audits – Nobody wants to feel like the IRS places them under a microscope via an audit… it isn’t comfortable and makes one second-guess every position taken on a tax return. Does it happen from time to time? Yes. Is there a way to insulate yourself from having a problem? Yes, keep your records. The Examination Division of the IRS has seen its employment numbers drop significantly over the last ten years, thereby preventing the IRS from maintaining a standard level of audits from year to year. I’m not saying that it’s something we all necessarily “want.” Yet, given that our tax system relies on voluntary compliance and not everyone volunteers the information appropriately, it’s a necessary evil.
Collections – As you may or may not know, a taxpayer must first be deemed “compliant” with their tax obligations to proceed to the resolution of a past-due tax balance owed to the IRS. Since the start of the COVID pandemic, I cannot tell you how many client accounts I have seen negatively impacted by this sole requirement. We have had Installment Agreements defaulted because the IRS’ system flags the account as non-compliant for the returns that were sent in on time but haven’t been processed yet, and we have had countless Offer in Compromise proposals sent back because tax returns that should have already been processed are still reflected as outstanding. To make matters worse, every month we have to delay a resolution being finalized, our clients are being charged penalties and interest on the past-due balance sitting on the account.
Technology – Given the fact that we cannot send an email to a Revenue Officer to address matters on a collection account because it is “considered unsecure” says it all. And many of the field offices of the IRS still rely on one free-standing fax machine to be utilized by large groups of employees to not only receive documentation, but also to send it out. This is definitely not an efficient way to conduct any type of business in 2022.
Concerns about increased collection efforts – Taxpayers who have owed a debt to the IRS for the past few years might feel like they’ve flown under the radar, which is mainly due to the staffing shortages that have left the IRS with no choice but to shut down many of the mechanisms historically used to collect past-due taxes. Over the past two years, the number of tax liens filed, bank account levies issued, wage/social security garnishments issued, and assets seized have been almost non-existent. With the budget to fill the vacant positions, the IRS Collections Department will begin ramping back up to the semblance of “normal” working order, and they will focus their efforts on resolving delinquent accounts more actively. It’s inevitable… there’s no way to sugar-coat this fact.
In summary, I understand that it’s not popular to say, “the funding earmarked for the IRS is truly justified and needed,” but given my first-hand experience of the negative impact all of this continues to have on our clients, I’d be lying if I said anything but! If you have a concern that you or a client may start feeling an aggressive push from the IRS because of tax delinquency, begin taking steps now to address the debt; being proactive rather than reactive means you control a situation rather than allowing it to control you. The Golden Lion Tax Solutions team has figured out how to best maneuver the current-day systems at the IRS to serve our clients most efficiently, but boy, do we long for the days when the IRS answered the phone within a one-hour hold time!
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