A smaller IRS staff could mean a longer wait for returns

Eric White This is all complex stuff. You’ve said that this filing season isn’t necessarily about one thing going wrong. It’s about the loss of taxpayer tools and the loss of workforce all hitting at the same time. What does that collision look like for the average filer who is going to become a customer of the IRS this year?

Julie Siegel Yeah, I mean, I think it’s going to unfortunately be a really tough filing season for filers. You know, every year the IRS hires thousands of seasonal workers on top of the normal workers that they have and the normal workforce at the IRS is down 20,000 workers, but they hire seasonal workers to pick up phones, answer questions, process filings. So, for the people who are supposed to process filings, they missed their hiring target by 98%. That means delayed returns. For the people who are supposed to pick up the phones, they missed the target, they do a little better, they only missed their target by a third, but they hired those people so late that they couldn’t adequately train them. So instead of being able to answer basic questions, those people can only refer you to sort of screen your calls for what they’re about and put them in the right queue. That means really long hold times. So it’s gonna be really rough. And what sort of kills me as somebody who believes in good customer service and also with somebody who was at the Treasury Department is that the folks there should have foreseen this because President Trump signed a big new tax law in July that has a lot of new provisions, whether you support them or not, that apply to individual filers. And they’re pretty complicated and people are going to have a lot of questions about them. And if I was there and my boss just signed a big new tax bill that has a lot of things that I would want people to claim, I would have made sure that people could ask questions. And in the absence of having the IRS in the field to answer those questions, which they can’t, to be clear, you know, that’s when people are left reeling on hold or turn to where the sort of field is right for less scrupulous, you know, tax preparers or Twitter or TikTok or whatever for advice, and taxpayers are really left holding the bag.

Eric White Yeah, coupled with the new rules that are, you know, it’s tax law, it’s going to be complicated and not having enough people to adequately address concerns of taxpayers. Where does the system start to buckle first? Are people going to be left in the wind and just saying, well, I did the best I could and potentially having a few months from now getting a letter saying, oh, you, you messed things up. I mean, what are we talking about at stake here?

Julie Siegel Yeah, I mean, I think everybody should know that you are responsible for the tax return that you file. And so I think that if I were, I’m not someone to give tax advice, but know that. So first thing to do is if you need advice, if you have questions, try and find reliable advice. If you’re somebody who is low income or you’re a senior or you are a member of the military, the IRS actually does have some good resources for you. Some good free resources, some good free help still that’s sort of untethered to this customer service, potential chokehold or whatever. So, there’s a MilTax product that’s run by some of the private sector folks. There’s the volunteer, the VITA program for low income folks and the TCE program for seniors. Those are really, really good programs. You can find information about those on the IRS website. For the rest of folks, if you don’t have time before that deadline and the problem with filing season is that there is a deadline, right? And there’s only so many hours you have to wait on hold and you need to find a reliable tax professional. There are two things that I would watch out for. One is to make sure that the person that you find is actually reliable. So ask around. You know, there are no national educational or ethical standards in order to register with IRS to be a tax preparer. And so that means that in years like this, where every year, but particularly in years like this where there seems like there are a lot of new tax provisions around a lot of people paying a shingle and people, and they try and attract customers by saying your refund will be bigger, your payment will be smaller. Then at the end of the day, they get their fee and there’s an amount owed. And so ask around, go to the Better Business Bureau, make sure that people have heard of the tax preparer that they’ve had good service before. The other scam that people run into is that they get quoted an amount by a tax preparer… and then you get sort of to the end of the line, you’ve given them all your information and all of that. And they say, wait a minute, I didn’t know you have a job with an employer and you also drive Uber. The Uber, filing the form for your Uber income will be another $50. Or filing your state income tax return will be in other $50, or your return is all set, and I’ll put your refund in this new bank account. If you want it in your bank account, it’ll be another $50. So making sure that you understand all of the fees and you ask the questions, explain your full tax situation. This happens with tax software and regular tax preparers. It happens with the big guys and the small guys. Making sure you do your research and explain your situation is really important. So unfortunately, all of this falls in to additional work for the taxpayer this year since the IRS isn’t providing tools or service.

Eric White Yeah, not to disparage the industry or anything, but as somebody who reviews press releases from the Justice Department, a good majority of those are former tax service assistant, you know, indicted on X charges and whatnot. So that’s definitely some good advice.

Julie Siegel I mean, it’s good talking about sort of federal employee issues as well, you know, the Federal Trade Commission and the state attorneys general over the last few years have taken a really big interest in the tax preparation industry, both the software companies and I think also tax preparers individually about this issue of pricing in tax preparation. So are the ‘free’ products really free? Or are they just trying to get you on the door to upcharge you? And there have been a number of settlements with the big tax preparation companies. Those parts of the Federal Trade Commission are severely understaffed now. And so not to load bad news on bad news, but you know, the watchdogs that are making sure even as the IRS steps back from providing customer service, the watchdogs, that are watching the private sector industry to make sure that it provides good service and doesn’t cheat customers, are also likely gonna step back just because of staffing concerns.

Eric White We’re speaking here with Julie Siegel, former deputy chief of staff for the U.S. Department of Treasury. Yeah, on the note of those tools, the IRS didn’t just lose people, it also walked away from some of those free tools that were actually free, that helped absorb a lot of the filing demand. With direct file gone, what extra friction do you expect taxpayers to run into?

Julie Siegel Yeah, I mean, walking away from direct file, I think, is a huge loss. It’s a tool that I helped stand up and it was a real example of product market fit, if you will. Taxpayers loved it. 90% of taxpayers said it was excellent or above average. And it started small in a couple of states and every year it covered more taxpayers and more states. And in the last year, it actually took information that the employers, that your job sent to the IRS and your W-2 and started to pre-fill it for taxpayers. So you didn’t even have to go through the filling out your tax return. It was sort of the dream. It was correcting and adding things that the IRS didn’t already have from you, that dream that everybody has or that frustration that everybody has every tax season when you look at the forms that come from the IRS and say, why, if the IRS already knows this about me, why do I have to go through the hours and hours and expense of filling out these forms? You know, I think that the notion that the IRS should both cut staff, so both cut the person-to-person interaction and cut the automation at the same time. And third, cut the staff that is building the automation and building these tools that can take you away from needing to call customer service just shows that there was no strategy here, no sequence here. This was a project that was designed to make the agency buckle. This wasn’t a project that was designed to make the agency more efficient. You know, another place that I can see that I saw this just looking at where the IRS is now, I saw a study that 77% of the most senior executives at the IRS are gone. As someone who walked into the Treasury Department as a political appointee, the week before filing season started in 2021, that’s shocking to me and scary to me and also really explains why filing season is likely to go so poorly. The expertise that those 77% of people have in terms of how to make sure that processes go smoothly, what to do when something goes wrong because something else goes wrong is immeasurable. It also is the kind of expertise that as a political appointee, when you come in with a whole bunch of plans and a whole of bunch of priorities, and inevitably the sign-offs and the plans for the processes that happen every year, like hiring customer service agents for filing season, whatever, fall sort of lower down on the priority list. It is the expert civil servants who flag for you that that needs to happen or there will be a catastrophe. And the fact that so many of those people left, so many the most experienced people, explains to me how you could under hire by 98% because the political appointees at the top couldn’t or didn’t hear that they needed to sign off right now or else, you know, lots of people were gonna be on hold and lots of were gonna suffer.

Eric White What can the leaders that are still there in the IRS and also Congress, what could it do to make next year easier and are there longer term fixes that could help rebuild the agency to get it back to square one?

Julie Siegel Yeah, well, so I think that this is a combination of people and tools and having a strategy to marry those two things, right? So you are always gonna need people to pick up the phones at the IRS and process returns. And there are not enough of those people right now. It is also true that IRS was mid-flight in a modernization that largely got stopped when DOGE walked in. And some of the backend stuff seems to have changed course, but maybe is continuing to work in some sense, though it’s very secretive, so hard to, but the customer service tool provision part has stopped. And so I think that Congress can dictate a little bit more what kinds of tools it expects the IRS to provide. And it should dictate both with resources and targets how it expects the IRS to hire. Now, Congress isn’t doing that. Congress has cut the IRS budget and it costs money to hire people. You know, one thing that happens when customer service is poor at the IRS is that people go to their members because they have a tax deadline. And so I have picked up the phone in congressional offices. I feel sorry for those staff assistants and interns, but I I think that people will hear from those poor constituents who are trying to figure [it] out. I think that it’s important for members of Congress to know that this is not an inevitable broken IRS. This is not inevitable broken government. This is the result of poor decisions by IRS leadership in the Trump-Vance administration in August. This is the result of the gutting of the IRS and the firing or letting go or DOGE-ing of civil servants and in particular, senior executives over the last year.