Already Stretched Thin, IRS Staff Plagued by No-Shows 

(Bloomberg) -- U.S. taxpayers can start filing their returns on Monday, but the Internal Revenue Service may be unable to answer questions or process returns quickly as the agency struggles to get employees as a result of the partial government shutdown.

More than half of the employees who were supposed to be back at work at the IRS’s Wage and Investment division -- the unit responsible for processing returns and answering the phone lines -- hadn’t returned as of Tuesday, said a House Democratic aide briefed on the plan.

About 5,000 of the no-shows claimed financial hardship and the IRS couldn’t reach another 9,000 employees at the first attempt. Those absences are in addition to what’s already a slimmed-down staff -- the agency is slated to have 57 percent of its workforce during the shutdown. The White House and Congress reached a deal to end the shutdown Friday, meaning the IRS will likely be fully funded when the filing season starts on Monday. The IRS declined to comment.

IRS phones are being answered about 35 percent of the time after callers wait up to 40 minutes, a sign that doesn’t bode well for congressional Republicans hoping to see their 2017 tax cut law rolled out smoothly this filing season. Answering calls promptly is a problem that’s plagued the agency for years, though in 2018 there was an improvement, with calls answered within 7 to 10 minutes.

The agency could also have trouble hiring and training seasonal workers that handle much of the customer service functions, such as answering phones, said Joseph Rosenberg a senior research associate in the Urban-Brookings Tax Policy Center. The IRS hired more than 10,000 seasonal workers last year.

“Lower income people who can’t afford to hire an accountant are the ones who are going to be the most affected by not being able to reach the IRS,” he said.

The upcoming filing season -- the first under President Donald Trump’s tax overhaul -- was always expected to be a rocky one. The IRS has been rushing to provide taxpayers and their advisers with guidance on how to file. Regulations on one of the most complicated aspects -- a 20 percent deduction for business owners -- was just made final last week. Additionally, the IRS has had to update hundreds of forms and instructions.

The IRS’s information technology staff is also a casualty of the shutdown, according to the House Democratic aide. The agency has lost about 25 IT staff members a week since the shutdown began 35 days ago. Two dozen employees have also retired in that time frame. Many are leaving to find new jobs, the aide said.

The lack of IT experience could be a problem for the agency that has faced computer in recent years. Last year, the IRS had to extend the filing deadline by a day after its website crashed on what was supposed to be the filing deadline. IRS systems were also breached in 2015 and the personal data of more than 700,000 taxpayers was stolen by hackers. The agency has made a series of changes to its computer system to accommodate all the changes in the new tax law.

The American Institute of Certified Public Accountants sounded a warning bell to Treasury Secretary Steven Mnuchin on Friday in a letter that warned that neither tax preparers nor taxpayers will be able to call the IRS during the filing season, and that ongoing audits are at a standstill during the shutdown.

“Once the shutdown ends, it may take months for the IRS to work through and resolve its backlog of taxpayer situations,” the letter said.

House Ways and Means Chairman Richard Neal told reporters Thursday he’s concerned that the issuance of tax refunds -- money that many people rely on to cover expenditures from the holidays -- could face delays. The IRS reversed its policy to not issue refunds during shutdowns and brought back workers who aren’t getting paid to process the payments. But the lack of workers on the job could mean the checks take longer to process than the three weeks the agency says is typical.

“People come to rely upon that stream of income,” said Neal of Massachusetts. “It’s still pretty rocky. I don’t think it’s been quite thought through yet.”

The U.S. Tax Court, which has been closed since Dec. 28, has canceled all trials scheduled for Feb. 4 and is still deciding whether to cancel those scheduled for Feb. 25. The agency said that IRS lawyers assigned to cases won’t be available to answer questions about cases until the government reopens them. The IRS is referring those with questions to consult the American Bar Association group for tax lawyers.

©2019 Bloomberg L.P.