April 18 Is Tax Day. Here’s How The IRS Is Overhauling Its Customer Service Right Now
The clock is ticking to file tax returns, and it turns out that the federal agency is just as stressed about it as the rest of us.
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Mid April marks a time that most adults 18 and over dread: the deadline for filing U.S. income taxes to the Internal Revenue Service (IRS). Between tracking down documents accumulated over the year prior, trying to understand tax jargon, logging expenses that can hopefully be counted as deductions, and determining whether to hire a certified public accountant or file on your own, individuals and corporations alike are filled with stress and anxiety in the months up to and following Tax Day. January to March are filled with promotional emails and text reminders to file on time and take advantage of the highest tax return possible from companies like TurboTax, H&R Block & even Robinhood. April to October are filled with extension filings, tax auditing, and wondering if you’ll be in jail by Tax Day next year.
It’s a running global joke that the U.S. is the only nation in the world that makes you guess the amount you owe in taxes–even though the government knows the exact number–in exchange for potential jail time, but the fear of the IRS is real for Americans.
Government: You owe us money. It’s called taxes.
— jordan (@jordan_stratton) April 16, 2019
Me: How much do I owe?
Gov’t: You have to figure that out.
Me: I just pay what I want?
Gov’t: Oh, no we know exactly how much you owe. But you have to guess that number too.
Me: What if I get it wrong?
Gov’t: You go to prison
While the impact of failing to file or pay taxes doesn’t fall upon taxpayers immediately, over time one may, quite literally, pay the price: if you don’t file and pay your taxes, you can face financial penalties, get funds legally removed from your salary payments by the IRS as tax payment, have your property possessed by the government, or if you’re intentionally avoiding paying your taxes, face jail time. The risk–and potential reward–of filing your taxes is what makes the IRS one of the most highly respected (and feared) agencies of the United States government; it’s also one of the worst when it comes to customer service.
Just last year the IRS received its lowest customer service score in history, and dropped the ball on processing nearly 5 million individual tax returns.These statistics come as no surprise–taxpayers, tax pros and even customer contact experts agree that the IRS has possibly the least desirable customer experience in the United States. But by comparison, in 2023 the IRS reports that nearly 213.4 million tax returns and other related documents have already been filed electronically by more than 90 million people. And if you’re not yet a part of that lump sum, you can submit your tax return without filing an extension until midnight EST tonight. Taxpayers who live in states like California, Alabama and Tennessee, however, have already been granted extensions by the IRS directly in consideration of natural disasters and climate complications that have left taxpayers vulnerable in those areas.
What Is Allowing the IRS to Suddenly Smash CX Metrics This Year?
This year the federal agency began reaping the benefit of a new 10 year $80 billion overhaul to help the department address issues of tax evasion and improve the customer experience for taxpayers. During the pandemic the IRS especially struggled and for over 10 years, reports NPR, the Internal Revenue Service had already been starved of funding needed to provide the U.S. Department of The Treasury with more auditors and lawyers to ensure that taxpayers are following through with the filing process. As it stands this year, taxpayers who are elligible for a refund can already expect a smaller amount. When juxtaposed with the fact that last year last year the tax gap of unpaid funds to the IRS rose dramatically to $428 billion, both financial factors signal just how badly the agency and taxpaying American public have needed support. Thanks to the Inflation Reduction Act signed into law by U.S. president Joe Biden in August of 2022, resources have finally been dedicated to the Department of The Treasury, specifically to assist the IRS in boosting its customer service scores. Signature of the Act by President Biden, “changed a wide range of tax laws and provided funds to improve our services and technology to make tax filing easier for you,” the IRS explains on its website regarding the gathering and allocation of funds.
“Thanks to Inflation Reduction Act resources, the IRS delivered dramatically improved service in Filing Season 2023,” the Department of The Treasury announced in a press release on April 17. “The IRS achieved 87% Level of Service, exceeding Secretary of the Treasury Janet L. Yellen’s goal of 85%. The agency also answered 2 million more calls through live assistance, cut phone wait times to four minutes from 27 minutes, served 100,000 more taxpayers in-person, digitized 80 times more returns than in 2022 through the adoption of new scanning technology, cleared the backlog of unprocessed 2022 individual tax returns with no errors, launched two new digital tools, and enabled a new direct-deposit refund option,” the statement reads. “This marks a vast improvement over 2022, when, due to a lack of resources, the IRS hit just 15% Level of Service to taxpayers and millions of refunds were delayed for months.
When It Comes To Federal CX, There’s Always Room For Improvement
During the height pandemic and throughout the past two years, taxpayers and IRS employees alike struggled to file, pay and process tax returns, resulting in many unanswered calls and billions of dollars in late penalties. Last year, for example, 9 out of 10 phone calls made to the IRS went unanswered. This year, however, 5,000 more people are in centers to help man phone lines and keep those call hold times considerably shorter. Accordingly to Yellen, the IRS is now consistently answering 80-90% of phone calls. She hopes that this cash infusion will help transform the IRS into “a modern 21st century agency,” and it’s something that taxpayers need.
While taxpayers can file their return, submit payment, and even get their refund processed online, through certain retailers or even using a prepaid card, all of these options include or incur additional processing, shipping or payment fees in some way shape or form. By comparison, filing via the IRS for free or paying the agency in hard cash aren’t as pricey, but are certainly more time intensive as some avenues for processing can involve scheduling multiple appointments with the IRS. It seems like no matter how you slice it, the process of paying taxes or collecting a refund is a lose-lose situation for many. Especially since many taxpayers go through third party organizations unaffiliated with the IRS to submit their tax filings, there are many channels they have to face in person, over the phone, via email or tax, on video and even by mail.
The federal government as an institution has long struggled with providing good customer service, and abilities to successfully adopt and deploy omnichannel customer service strategies vary by department, funding prioritization and, of course, political affiliation. Moreover, the sensitivity, security and geographically limiting nature of government operations makes it challenging for any one branch of the government to champion itself as a modern day CX leader. “The Federal Government interacts with millions of people each day and provides vital services during some of the most critical moments in people’s lives,” the White House acknowledged in a 2021 fact sheet regarding its complicated history with customer service, despite being an institution designed “for the people, by the people,” as President Abraham Lincoln famously said during the Gettysburg Address on November 19, 1863.
“Whether searching for vaccine safety information, claiming retirement benefits, receiving health insurance, passing through a security checkpoint, or checking the status of a farm loan application, Americans expect Government services to be responsive to their needs,” the statement from the White House continues. “But too often, people have to navigate a tangled web of Government websites, offices, and phone numbers to access the services they depend on.”
That year, President Biden signed an Executive Order entitled “Transforming Federal Customer Experience and Service Delivery to Rebuild Trust in Government.” The order included 36 customer experience improvement commitments across 17 Federal agencies, including the IRS. Now, with funding from the Inflation Reduction Act readily available, the agency must continue this cadence to ensure that by the end of 2023 none of us are lying awake at night wondering if we’ve just accidentally committed tax fraud.
