April 12, 2023

IRS Unveils New Strategic Operating Plan

For the last few years, the IRS has been plagued by several issues which have not only resulted in return processing delays but also a decline in customer service. It started when the IRS had to shut down onsite operations, which included activities at mail processing facilities. This meant returns and other communications could not be acted on causing an increase in taxpayer communication and processing delays. In addition, the shutdown also disrupted enforcement activities because of limited access to mail, fax, and print services. Once restrictions were lifted, inaccurate or outdated notices were erroneously sent out creating even more confusion. In fact, the situation was so bad the agency stopped sending any notices until the backlog could be cleared.

Unfortunately, the end of COVID restrictions did not relieve these issues. It was reported earlier this year the IRS still has a backlog of 4M unprocessed returns while the ability to reach a customer service agent remains challenging. To address these issues, Congress allocated $80B to the agency as part of the Inflation Reduction Act. Earlier this month, the IRS released the Inflation Reduction Act Strategic Operating Plan, which outlines the vision and strategic direction for the coming years. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.

Operating Plan Summary

The operating plan aims to accomplish five main objectives that address various weaknesses and issues. This includes a dramatic improvement to taxpayer services to meet obligations and receive eligible tax incentives, opportunity to quickly resolve taxpayer issues, expanded focus on enforcement activities for taxpayers with complex filings, upgraded technology to drive more efficient operations, and the ability to attract, retain, and empower a highly skilled and diverse workforce. Each objective will be accomplished through initiatives and projects that will be deployed over multiple years.

Taxpayer Outcomes

For each objective the agency has identified a series of taxpayer outcomes which includes specific changes, including:

• A Dramatic Improvement to Taxpayer Services – The current filing process is difficult, challenging, and complex, and the agency has not been able to meet taxpayer needs. In addressing the issue, taxpayers can expect access to online services where they can select a preferred communication method, receive information on available tax incentives, and easy to read data to start the current year return. In addition, a new chatbot feature will be introduced to answer basic questions with an option to request an agent call.
• Quickly Resolve Taxpayer Issues –  Resolving issues and errors currently takes much longer than necessary. To address the issue, the agency will soon offer digital alerts for minor errors, notices for missed incentives, installment agreement offers for those unable to pay at filing, and an automatic inquiry for potential misreporting. These changes should result in faster resolution of post filing compliance issues.
• Expanded Enforcement Focus – Detecting and addressing noncompliance by those with complex tax filings has been a persistent problem. To address the issue, the agency will increase compliance coverage to fully assess risks including those related to complex partnership structures, improve risk identification through better use of technology and data analytics, and increase the expertise and capacity needed to examine complex returns. These changes should result in decreased noncompliance rates, decreased enforcement activities with compliant taxpayers, and appropriate activities to drive increased voluntary compliance.
• Efficient Operations Through Upgraded Technology – The IRS uses some of the oldest IT infrastructure in the federal government. To address the issue the agency will invest in modernization, improve the privacy and protection of taxpayer data, use data analytics to drive decision making, and consolidate and improve data access. These changes should result in faster taxpayer issue resolution, increased ability to detect noncompliance, and allow for faster adoption of new technology.
• Attract, Retain & Empower A More Robust Workforce – A key challenge has been the inability to hire, train, engage, and empower the workforce needed to manage multiple demands. To address these issues the agency will increase the number of new hires with key skills (i.e., data analytics and technical tax experts), build enhanced recruiting capabilities, create new development opportunities, and modernize systems to create a better employee experience. These changes should increase employee retention and engagement, increase quality of new hires, and expand employee development opportunities.

Contact Us

It appears the IRS is going to embark upon a significant change over the coming years. It is expected these changes will make it easier for Atlanta businesses and individuals to interact with the IRS more easily. However, in the immediate future, it is expected that service issues will continue as the agency undergoes transformation. If you have questions about the information outlined above or need assistance with a tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.