Taxpayers would benefit if the IRS made proper use of digital communications | Wbactive

The IRS risks missing three key target setting agendas if it doesn’t expand its digital program to work directly with taxpayers, the Treasury Department’s Inspector General for Tax Administration (TIGTA) said in an audit report.

TIGTA published the Taxpayer Digital Communication (TDC) program audit report titled More should be done to increase the use and availability of the IRS’s digital communication tools to taxpayers – earlier this month.

“Without a commitment from IRS leadership to significantly expand the TDC program to IRS functions and operations that work directly with taxpayers, the IRS may not be able to implement the stated rights, goals and objectives of the Taxpayer Bill of Rights, the IRS Strategic Plan, and the Taxpayer Experience Strategy,” said Heather M. Hill, Assistant Inspector General of Auditing, in the audit report.

TIGTA made five recommendations:

  • Use the lessons learned to extend digital communications to all taxpayers.
  • Reassessing the level of security required for TDC installations.
  • Development and implementation of an evaluation plan to evaluate the TDC program and its management of TDC installations.
  • Develop a methodology to gather information from all stakeholders to determine why users may not be interested in TDC installations, what are the barriers to adoption, and how IRS staff can assist taxpayer adoption.
  • Establishment of an office to coordinate and manage the expansion and use of digital communications between stakeholders.

IRS management agreed with the second recommendation and said it would reassess the level of security required for TDC installations. She stated that she had already implemented the other four recommendations. However, TIGTA said the IRS descriptions of the corrective actions taken “did not entirely” conform to the recommendations.

The TDC program has its roots in the Office of Online Services (OLS), which the IRS created in July 2011 to transition to digital communications, including streamlining the filing and processing of tax forms. In 2013, OLS began a partnership with IRS operations to use products that would update processes for digital communications. This initiative was eventually dubbed the TDC program, which was formally established with the OLS in December 2020.

TIGTA and the IRS disagree on all of the goals of the TDC program. For example, the audit report states that the IRS planned to use secure messaging and digital communications as “a tool for taxpayers to increase self-reliance and reduce dependency on IRS employees to perform simpler tasks.”

OLS Director Karen Howard, in her response to the audit report, which is included in an appendix to the report, wrote that the statement “misstates the goal of secure messaging. Self-sufficiency and reduced reliability are not and never have been the goals of secure messaging.”

Digital communications should be a priority for the IRS, the audit report says, because they have the potential to enable the agency to more efficiently resolve taxpayer issues; you can save money; and they can enable the IRS to better communicate with taxpayers at a time when the agency is trying to process millions of backordered paper tax returns, amended tax returns, and other restitution-related transactions.

The IRS did not adequately implement the TDC program, the audit report said. For example, the IRS “has not identified any proactive IRS functions or operations for which digital communications would have provided significant benefits for both taxpayers and IRS employees,” it said. Instead, “any IRS program, function, or business entity wishing to explore a digital communications deployment was allowed to express interest,” it said.

Additionally, TIGTA noted that the IRS had no performance measurements for the TDC program office and “none of the offices or programs involved in the TDC installations were required to provide cost-benefit analyses.”

Howard said that TIGTA underestimated “the complexity of rolling out new installations in different areas” and that the IRS had goals and objectives that were communicated to TIGTA.

In her conclusion, Howard wrote, “As the TDC feature adds more installs and grows, we expect more taxpayers will choose this virtual channel, resulting in an improved customer experience. … While it’s very early in the process, we anticipate that some of the service transformation work enabled by the Inflation Reduction Act of 2022 will include another TDC expansion.

Howard was referring to the $80 billion over 10 years that Congress awarded to the IRS through the Inflation Reduction Act, PL 117-169.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Wagoner@aicpa-cima.com.

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