TIGTA: Taxpayers would benefit if IRS used digital communications tools appropriately

The IRS risks falling short of the objectives of three major goal-setting agendas if it doesn’t expand its digital program so that it works directly with taxpayers, the Treasury Inspector General for Tax Administration (TIGTA) said in an audit report.

TIGTA issued the audit report of the Taxpayer Digital Communication (TDC) program — titled More Should Be Done to Increase Use and Availability of the IRS’s Taxpayer Digital Communication Tools — earlier this month.

“Without commitment by IRS leadership to significantly expand the TDC program into IRS functions and operations that work directly with taxpayers, the IRS may be unable to meet the stated rights, goals, and objectives of the Taxpayer Bill of Rights, the IRS Strategic Plan, and the Taxpayer Experience Strategy,” said the audit report from Heather M. Hill, deputy inspector general for audit.

TIGTA made five recommendations:

• leveraging lessons learned to expand digital communication to all taxpayers.

• reevaluating the level of assurance necessary for TDC installations.

• developing and implementing an evaluation plan to assess the TDC program and its management of TDC installations.

• developing a method by which information is obtained from all stakeholders to determine why users may not be interested in TDC installations, what barriers to adoption exist, and how IRS employees can support taxpayer adoption.

• establishing an office that would be responsible to coordinate and manage the expansion and use of digital communication across stakeholders.

IRS management agreed with the second recommendation and said it would reevaluate the level of assurance necessary for TDC installations. It indicated that it had already implemented the other four recommendations. TIGTA, however, said the IRS descriptions of the corrective actions taken were “not entirely responsive” to the recommendations.

The TDC program has its roots in the Office of Online Services (OLS), which the IRS created in July 2011 to move toward digital communications, including the streamlining of the filing and processing of tax forms. In 2013, OLS began a partnership with IRS business operations to use products that would update processes for digital communication. That initiative eventually was called the TDC program, which was officially established with the OLS in December 2020.

TIGTA and the IRS don’t agree on all of the objectives of the TDC program. For example, the audit report stated that the IRS planned to use secure messaging and digital communication as “a tool for taxpayers to increase self-sufficiency and decrease reliance on IRS employees to complete simpler tasks.”

OLS Director Karen Howard wrote in her response to the audit report, contained in an appendix in the report, that the statement “misrepresents the goal of secure messaging. Self-sufficiency and decreased reliance are not and never were the goals of secure messaging.”

Digital communications should be a priority for the IRS, the audit report said, because they have the potential of allowing the agency to resolve taxpayer issues more efficiently; they can save money; and they can allow the IRS to better communicate with taxpayers in a time when the agency is trying to process millions of backlogged paper tax returns, amended tax returns, and other return-related transactions.

The IRS hasn’t implemented the TDC program appropriately, the audit report said. For example, the IRS didn’t “proactively identify IRS functions or operations for which digital communication may have provided sizable benefits for both taxpayers and IRS employees,” it said. Instead, “any IRS program, function, or business unit wishing to explore a digital communication installation was allowed to express interest,” it said.

In addition, TIGTA found the IRS had no performance measures for the TDC program office, and “none of the offices or programs involved in the TDC installations were required to provide any cost-benefit analyses.”

Howard said that TIGTA underestimated “the complexity of launching new installations in different areas” and that the IRS did have goals and objectives, which were provided to TIGTA.

In her conclusion, Howard wrote: “As the TDC capability adds more installations and grows, we expect more taxpayers will choose this virtual channel, creating an improved customer experience. … While it is still very early in the process, we anticipate that some of the service transformation work made possible by the Inflation Reduction Act of 2022 will include further TDC expansion.”

Howard was referring to the $80 billion over 10 years that Congress appropriated to the IRS through the Inflation Reduction Act, P.L. 117-169.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.