IRS #FAILs at Online Services Spell Problems for Professionals

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Unintended consequences: Pushing low-end taxpayer-clients to tax professionals.

By Rick Telberg
CPA Trendlines

Online accounts at the IRS are a good idea, but maybe not as good as the IRS would like to think – certainly not as good as a qualified tax preparer.

The Taxpayer Advocacy Service has long called for online accounts. In 2016 they became a reality. Unfortunately, for many, it has been a painful reality.

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The migration toward online assistance – ideally automated online assistance – is a product of the severe budget cuts the IRS has suffered. The Service can’t afford personnel to man the phones or keep Taxpayer Assistance Centers open.

But the budget cuts did not mandate a cut in the Taxpayer Bill of Rights. Taxpayers still have a legal right to quality service, confidentiality and a fair, just tax system.

The online accounts are helpful for

  1. retrieving details about balances and past payments,
  2. frequently asked questions about balances and how to dispute them,
  3. messages about impending filing and payment dates,
  4. snapshots of tax record data for the current year, and
  5. transcripts of past returns, income and other records.

But the accounts are useful only if taxpayers

  1. know about the accounts,
  2. have access to the internet,
  3. bother to open an account,
  4. can figure how to open and use an account,
  5. trust the online system,
  6. can find answers to their questions and
  7. have an alternative if any of these conditions are not met.

So far, the TAS says, the online account system has failed to ensure those and other rights in several ways.

  • The prioritization of online services over other service channels (such as phones) is based on budgetary limits, not on taxpayer preferences or impact on compliance.
  • The Secure Access e-Authorization system, while absolutely necessary, manages to authorize only 30 percent of bona fide applicants.
  • Judging by low participation in the Taxpayer Digital Communication pilot project, taxpayers just aren’t interested working online.

Taxpayers in the Dark

The prioritization of online accounts tends to leave a lot of taxpayers in the dark. Fourteen million taxpayers have no home access to the internet, and 41 million don’t have broadband access. Of those with no access, 35.5 percent are poor, 41.7 percent are seniors and 31.2 percent are disabled. In other words, the nation’s most vulnerable populations are being even further hampered in their attempts to pay their taxes.

Fun fact: If you laid out 14 million taxpayers head-to-foot, they would reach from the North Pole to the South Pole, and you’d still have a quarter million prone taxpayers left over, enough to line the Washington D.C. beltway four times.

The TAS points out that the failure of the e-Authorization system does not mean the IRS should loosen security. Rather, the Service needs to consider how it will work with the 70 percent of applicants who fail to get authorization. If they can’t open an online account, what are they supposed to do?

Still, while defense against digital fraud has never been more necessary or more difficult, sometimes, the TAS suggests, e-Authorization may be overkill. When taxpayers are sending in certain kinds of documents – audit requests, for example – maybe the rigors of e-Authorization aren’t necessary.

Nice Try, IRS

The Taxpayer Digital Communication project was a dismal failure. The IRS invited 700 people with Earned Income Tax Credit or levy cases to participate. Fewer than 10 managed to open accounts. Some didn’t receive or understand the invitation. Some failed the e-Authorization. Some didn’t trust the system. Some didn’t understand why they should participate. Some found that it was easier to just fax the information or scan it and send it by email.

If those results are any indication, Americans just aren’t ready for an online relationship with their favorite tax collection agency.

Which is another thing. Yes, there is only one federal tax collection agency, but that doesn’t mean taxpayers don’t have an alternative. Noncompliance is always an option. Maybe it’s less than legal, but for millions of people who can’t or won’t use online accounts and can’t get through on the phone and don’t live near a Taxpayer Assistance Center, noncompliance, caused by nothing more than confusion, may be the only option.

Actually, there is one other option, one the IRS wants more people to use: a professional tax preparer – assuming, of course, they can get one to answer the phone in, say, the early days of April.

4 Responses to “IRS #FAILs at Online Services Spell Problems for Professionals”

  1. Tony Novak

    I failed the log in verification because IRS had no record that my cell phone address was registered o me. I haven’t taken the time to investigate and find ou what other oprions are available. Bit my point is that I shouldn’t have to do this. There is no other organization in the world whose security system I can’t negotiate without this type of extraordinary effort.

    • Ismael Ventura

      I have been trying to validate my own account. I went personally to an IRS office and supposedly everything was OK; and still they are telling me that they cannot validate my online account. I have been dealing with this for over 6 months.

  2. donna northcutt

    I file all of my personal tax returns using the regular mail. I get all of my refunds by paper check by regular mail. I pay all of my tax payments with a paper check sent by regular mail. If I need to contact the IRS I use my land line & wait as long as it takes. I think the online services are greatly overrated & I will not use them as long as there is another way.

  3. Adelaide B Kent

    I have continued to mail our returns because my husband insists on it, but recently, having observed the quantity of fraud going on with the filing system, I have begun to believe that good ol’ mail is the safer way to file.


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