IRS Expands Online Account Tools

Last year IRS launched an online account tool to allow individual taxpayers to look up basic information such as balance due for any years where there was an outstanding liability. Earlier this week, IRS announced that the tool’s now include the option to view up to 18 months of tax payment history. The online portal also allows individuals to get transcripts of Form 1040-series tax returns through the IRS’s Get Transcript tool and make payments through electronic payment options.

Mindful of the data breaches of the recent past IRS appears to have inserted a robust authentication process. To register, IRS requires the following:

  • Social Security Number
  • Date of birth
  • Filing status and mailing address from latest tax return
  • Access to an email account
  • Personal account number from a credit card, mortgage, home equity loan, home equity line of credit or car loan
  • A mobile phone with your name on the account.

The news release accompanying the development provides a bit more detail on registering:

Taxpayers who have registered using Secure Access for Get Transcript Online or Get an IP PIN may use their same username and password. To register for the first time, taxpayers must have their personal and financial information including: Social Security number, specific financial information, such as a credit card number or loan numbers, email address and a text-enabled mobile phone in the user’s name.

Moreover, IRS seems to be moving toward an authentication that should limit inappropriate access:

As part of the security process to authenticate taxpayers, the IRS will send verification, activation or security codes via email and text. The IRS warns taxpayers that it will not initiate contact via text or email asking for log-in information or personal data. The IRS texts and emails will only contain one-time codes.

The shift to an online account portal for individual taxpayers is a welcome development, as digitally capable taxpayers will  access information that until now generated resource draining phone calls and correspondence. With the opportunities it provides, it also presents challenges. The National Taxpayer Advocate, for example, has discussed on numerous occasions how many segments of the taxpaying public (such as the poor and elderly) may have limited access to technology and differing preferences than other taxpayers (see e.g., her comments from the 2016 Annual Report at around page 23, where she discusses research showing that “28.5 percent, 40 percent, and 31.9 percent of the Low Income, Senior, and Disabled taxpayers, respectively, had no broadband access at home, significantly limiting their online activities.”)

It is helpful that IRS is seeking comments from individuals who use the online tools. The problem comes if the IRS fails to recognize the needs of a sizeable portion of the population for whom this is not a viable option. It is important that Congress funds the IRS and IRS addresses the needs and preferences of the millions of taxpayers who by choice or necessity will be communicating with IRS via correspondence, telephone or in person.

 

 

Technology and the Tax System: A Less Personal Appeals Office Coming Our Way

In the last month, Appeals has announced plans to shift away from in-person conferences and institute a default rule that sets conferences for telephone and possible virtual conferences.  I will describe the changes and highlight some of the challenges facing the tax system as Appeals and other IRS functions shift even further away from in-person meetings.

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Technology is rapidly changing how the IRS intersects with taxpayers. For example, in 2000, only 28% of individual income tax returns were e-filed. In 2005 for the first time more people e-filed than paper, and last filing season over 86% of individual income tax returns were e-filed. We are also seeing an uptick in self-prepared returns, especially among lower-income filers, reflecting perhaps a growing comfort level that many Americans seem to have for DIY and software.

We have discussed the IRS’s big plans for its Future State initiative which is at it describes its overall efforts to “take advantage of the latest technology to move the entire taxpayer experience to a new level.” At the recent ABA Tax Section meeting, the National Taxpayer Advocate announced that its end of year annual report will include its ideas of the future, informed by its public forums.

Appeals also has been thinking about how technology would alter the Appeals experience. It recently revised the Appeals section of the Internal Revenue Manual, and those changes reflect the decreasing use of in-person conferences to resolve Appeals cases. The new default method for Appeals’ conferences is by telephone.

IRM 8.6.1.4.1 now provides that if a taxpayer requests an in person conference, the taxpayer instead should be offered a virtual service delivery (VSD) conference, if the technology is available (generally defined as within 100 miles of the taxpayer’s address) (for background on VSD, I wrote about it a couple of years ago in Technology and Tax Administration: The Appeals Virtual Service Delivery Program and the National Taxpayer Advocate in a section of the 2014 annual report offered suggestions on ways IRS could better use this technology).

What if a taxpayer within 100 miles does not want to use VSD technology? The new IRM provisions states that taxpayers will get an in-person conference only if the Appeals team manager (ATM) agrees either following a taxpayer or Appeals employee request. The provision then goes on to list factors that the ATM should consider in evaluating the request:

  • There are substantial books and records to review that cannot be easily referenced with page numbers or indices
  • The Appeals Team Employee  cannot judge the credibility of the taxpayer’s oral testimony without an in-person conference
  • The taxpayer has special needs (e.g. disability, hearing impairment) that can only be accommodated with an in-person conference
  • There are numerous conference participants (e.g., witnesses) that create a risk of an unauthorized disclosure or breach of confidentiality
  • An alternative conference procedure (e.g., Post Appeals Mediation (PAM) or Rapid Appeals Process (RAP)) involving separate caucuses will be used
  • Another IRM section specific to the workstream calls for an in-person conference

IRS is also working out the kinks in rules that will generally prevent taxpayers from getting an Appeals case reassigned from a campus to the field. That change would be consistent with the IRM changes already in place relating to initial requests.

Some Observations

I understand the allure of creating efficiency gains through technology and limiting personal contacts, especially as technology improves and Congress continues to squeeze IRS budgets.  I recently oversaw our Graduate Tax Program’s development of an online program. In that program we have created a curriculum that relies on interactive exercises and a real-time (synchronous) weekly session that allows for discussion and a robust give and take with students. I was skeptical of our ability to deliver a high quality experience. I no longer am. The technology is robust.  I am not a technology expert, but I know that it is not easy to teach in a distance platform. For each class we launch we spent hundreds of hours developing the class ahead of time, working with instructional designers who knew nothing about tax or law but who understood education and technology.

The IRS task is much more difficult than ours was in Villanova’s tax program. Our students are self-selecting. We train students in the technology before they start class. IRS generally and Appeals has a much more challenging task in front of it. This is especially true when many taxpayers who interact with IRS do so without the benefit of a representative.

There is substantial push back on these proposed Appeals changes, and especially the default rule setting conferences for telephone conferences and the somewhat narrow circumstances justifying transfer to an in-person meeting. For example in a letter released this past week the American College of Tax Counsel suggested that the Manual should be revised to allow for lower level Appeals employees to allow a transfer and reflect additional considerations for a transfer decision, including the complexity of the case, whether penalties are involved, the taxpayer’s compliance history, and the amount at issue relative to the taxpayer’s income. (For the ACTC letter see here.)

I am not enmeshed in Appeals’ cases these days so I do not know the precise impact of the changes. Nor do I know how flexible Appeals will be when taxpayers request to opt out of the default telephone conference. It does seem, however, that before implementing these rules Appeals would have been well-served to solicit greater input from stakeholders. That likely would generate better substantive rules as well as greater acceptance of the rules.

A good contrast for this is the NTA public forum approach with Future State. By discussing the findings and observations in the next annual report, the NTA ensures that there will be an IRS engagement with the concerns that the forums have raised. Assuming IRS engages with those findings in a serious way, that generates a transparency and discussion that in my view likely leads to better outcomes, and greater confidence and trust in the tax system.