NTA BLOG: Lessons Learned From COVID-19: The Critical Need to Improve IRS Digital Services
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Individuals, businesses, schools, and federal and state agencies all continue to be impacted by the COVID-19 pandemic. And as the IRS resumes its business operations that were partially or completely shut down at the inception of the COVID-19 national emergency, it is still facing challenges of balancing the health and safety of its employees with accomplishing its core mission: providing much-needed services for taxpayers; administering the 2020 filing season in which it has already processed over 149 million returns and issued over 119 million refunds totaling over $290 billion; guarding against identity theft, refund fraud and sophisticated cyber-attacks often exceeding 1.4 billion attempts each year; performing the extensive programming required to administer the 2021 filing season; processing any remaining Economic Income Payments (EIPs); analyzing potential legislation and preparing for another possible round of stimulus payments; providing legal and administrative guidance; incorporating new legislation changes into its operations; and deploying hundreds of Customer Service Representatives to assist with wildfire and hurricane relief efforts – all while continuing its tax enforcement efforts in a socially distanced environment. As part of the reopening, the IRS continues to evaluate what needs to be done to administer the tax laws and provide necessary taxpayer services under similar conditions in the future so that it can provide the necessary service required by taxpayers. My office will continue to advocate for improved taxpayer services regardless of the circumstances.
At the beginning of the pandemic, call centers and Taxpayer Assistance Centers (TACs) were shut down, so taxpayers could not reach the IRS by phone, in person or by mail. Paper processing centers were shut down, so paper tax returns and other paper correspondence could not be opened or processed which created a backlog. The closures required by the COVID-19 pandemic and the subsequent challenges exposed critical shortcomings in IRS technology impacting many functions within the IRS. As the IRS takes stock of lessons learned from this experience, one lesson is obvious: improvement of the technology capabilities of the IRS is critical. It is not a small or inexpensive task, but it is imperative for proper tax administration. The country no longer has an option but to support appropriate funding for the IRS. It is incumbent upon Congress to fund the technological upgrades the IRS requires to provide an enhanced level of service and improve its overall operations. Modernizing its technology and increasing the use of digital communications and the electronic production of documents in a secure environment is no longer a luxury; rather, it is a required operational need. In this blog, I tackle the expansion of digital service options to improve the taxpayer experience as taxpayers interact with the IRS. In my next blog, I will discuss the need for multi-year funding to modernize IRS computer systems and infrastructure.
For years, the IRS has steered taxpayers toward digital self-help. In fact, the 21st Century Integrated Digital Experience Act requires the IRS to regularly review its public-facing services and make them available in a digital format, to the greatest extent practicable. As a result, the IRS continually expands its offerings of digital service options in an effort to meet taxpayer demand as well as to provide more efficient service delivery methods. In addition, § 1101(a)(1) of the Taxpayer First Act (TFA) requires the IRS to submit to Congress a written comprehensive customer service strategy with a plan to provide assistance to taxpayers, including online services that are secure, designed to meet reasonable taxpayer expectations, and adopts appropriate best practices of customer service in the private sector.
Within the IRS there is an energy behind the design and implementation of the TFA and I understand the written strategy will be provided to Congress by the end of the year. However, implementation and success of the IRS’s TFA plan will be contingent on critical additional funding.
During the COVID-19 crisis, with the temporary closure of TACs and phone lines supported by customer service assistors, the IRS encouraged taxpayers to use digital service options. However, this pandemic exposed shortcomings in the IRS’s portfolio of these options. Accordingly, I offer the following proposals to improve taxpayers’ experiences as they digitally interact with the IRS in the future:
- Expand Digital Acceptance and Transmission of Documents and Digital Signatures. The March closure of IRS offices and mail facilities made it impossible for IRS employees to receive paper documents from taxpayers and representatives. As a workaround, the IRS issued temporary guidance on March 27, 2020, which it subsequently extended through the end of 2020, that authorizes employees to accept and transmit documents related to the determination or collection of a tax liability by email using an established secured messaging system. Employees are also permitted to accept images of signatures (scanned or photographed) and digital signatures on documents related to the determination or collection of a tax liability. On April 13, 2020, TAS issued similar guidance regarding digital communications and transmission of documents for open TAS cases, and subsequently updated the guidance and extended it through the end of 2020. On August 28, 2020, the IRS announced that it will temporarily accept digital signatures on additional forms that cannot be electronically filed. In addition, TFA § 2302 amended Internal Revenue Code (IRC) § 6061(b)(3) to require the IRS to publish guidance establishing uniform standards and procedures for the acceptance of taxpayers’ electronic signatures for any request for disclosure of a taxpayer’s return or return information (e.g., powers of attorney (Form 2848) and tax information authorizations (Form 8821)).
The TFA and the COVID-19 pandemic have provided the impetus for the IRS to expand its use of email and acceptance of electronic digital signatures in line with the practices of private financial institutions. These changes were long overdue and have been very positively received by practitioners. The IRS is continuing to assess these changes to ensure they aren’t creating significant data security vulnerabilities and institute additional safeguards, if required. Going forward, I urge the IRS to accept electronic signatures on virtually every document that requires a signature and to continue to allow and expand its use of secure digital communications on a permanent basis. I strongly encourage the IRS to solicit practical suggestions regarding how to best use digital signatures from external stakeholders, including the Internal Revenue Service Advisory Council (IRSAC), the Electronic Tax Administration Advisory Committee (ETAAC), the American Institute of CPAs (AICPA), the American Bar Association (ABA) Tax Section, and the National Association of Enrolled Agents (NAEA), all of which have already provided comments to the IRS on this topic.
- Improve Online Account Accessibility and Features. The IRS offers an online account application for individual taxpayers and is in the process of developing Tax Pro, an online account application for practitioners. Taxpayers who gain online account access can view their balance due, make payments, retrieve account transcripts, and even view the status of any EIP, among other features. The IRS continually adds features to the online account application. However, certain taxpayers have difficulty satisfying the elevated e-authentication requirements of the application. For example, in July 2020, only 50 percent of users who attempted to register for an online account passed the IRS’s e-authentication requirements. The elevated authentication requirements are necessary to screen out unauthorized access and, often, highly sophisticated hacks of taxpayer information. However, legitimate taxpayers have experienced difficulties, as the current authentication process is complex and not user-friendly. I recommend that the IRS continue to assess ways to increase accessibility while also maintaining required compliance with strict security guidelines developed by the National Institute of Standards and Technology (NIST). We anticipate that the IRS will continue adding features (e.g., digitally communicating in a secure environment, viewing the status of submitted correspondence, and viewing copies of notices mailed by the IRS) to enable a one-stop customer service experience for users once staffing and an increased information technology budget are provided, and security risks are addressed.
In addition, the IRS currently offers e-Services, an online application for tax professionals. E-Services gives professionals access to a variety of services, including (i) the Transcript Delivery System to view filed returns and taxpayer account information, and (ii) Taxpayer Identification Number (TIN) Matching to validate TIN and name combinations prior to submitting information returns. As stated above, the IRS is developing Tax Pro, a much-needed online platform for tax professionals to digitally create and manage third-party authorizations (e.g., Forms 2848 and 8821). It is my understanding, that due to lack of funding, Tax Pro will not have robust features for many years. I recommend that Congress provide appropriated funding to allow the IRS to implement a full-service online tool for tax professionals, possibly integrating it with e-Services. The online tool for tax professionals should provide services at least comparable to those offered on the taxpayer online account application
- Offer Videoconferencing Options to Taxpayers. Videoconference technology allows taxpayers and representatives to be both seen and heard, and to share documents, without being physically present. The IRS Independent Office of Appeals currently offers WebEx technology for virtual face-to-face conferences between taxpayers, representatives, and Appeals Officers. The IRS Office of Chief Counsel and the U.S. Tax Court are conducting pre-trial conferences and trials using videoconferencing technology. TAS is also evaluating the feasibility of using videoconferencing technology for virtual face-to-face meetings between Case Advocates and taxpayers (or their representatives). Videoconferencing is not meant to replace in-person or telephone conference options; rather, it adds a digital option to communicate with taxpayers and their representatives.
I recommend that the IRS evaluate the feasibility of expanding this technology to as many taxpayer-facing functions as possible. Unfortunately, existing bandwidth to handle widescale use of this technology is so limited that the IRS generally has not permitted even internal videoconferencing during COVID-19 closures. Yet videoconferencing should be expanded because it can help fill current or future voids in face-to-face service at TACs and in dealing with revenue agents or revenue officers. In addition, taxpayers geographically remote from a TAC or TAS local office would find using videoconferencing technology more helpful and economical than traveling for an in-person conference. Even taxpayers not geographically remote may prefer the convenience of a virtual meeting. The IRS has utilized Virtual Service Delivery (VSD) in the past, but it should modernize its VSD capabilities to allow taxpayers to use neighborhood facilities, such as local post offices, community centers, Volunteer Income Tax Assistance sites, and other locations, to log into secure IRS applications. It is my understanding that the IRS is exploring the feasibility of this option for remote locations. We encourage them to continue down this path.
Despite the many benefits of digital communication, it is critical that telephonic and in-person service options are maintained. Millions of taxpayers still do not have broadband internet, computer skills, or the ability to interact electronically, while other taxpayers strongly prefer to interact with the IRS by telephone or in-person. For these reasons, I believe it is critical that the IRS maintain a robust omni-channel service environment at the same time that it enhances its digital offerings.
In closing, I would be remiss if I didn’t acknowledge that the IRS, its employees, and their families have also been significantly impacted. I want to thank the many hardworking and dedicated TAS and IRS employees, including leadership teams, support personnel, and contractors, who have worked countless hours day after day in the office or remotely during the pandemic while juggling their own health and safety issues. I understand there are still many taxpayers with unresolved tax issues who are extremely frustrated with the process, and in my role as the National Taxpayer Advocate, I will advocate that the IRS continue to work to fix taxpayer problems without additional delay. Most of the problems, however, are a product of circumstance, particularly the office closures required by COVID 19-related social distancing requirements. Since mid-March, employees have faced the daunting task of not only administering the tax filing season under remarkably challenging circumstances, but also disbursing some 160 million EIPs on short notice. Without the dedication and hard work of IRS employees, taxpayer service might have been much worse. I am grateful to TAS employees and employees in other parts of the agency for all they have done to keep the tax system operating.
The views expressed in this blog are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget.