Status of the IRS Taxpayer Service Program

Due to Federal budget deficits and budget cutbacks, the Internal Revenue Service (IRS) reduced its taxpayer service activities; further reductions are contemplated. IRS established an expanded taxpayer service in the 1950's. In the early 1970's, a separate Taxpayer Service Division was established in the national office and, by the end of the decade, separate divisions had been established in each taxpayer district. A recently announced IRS reorganization has reduced the visibility and identity of the program, and the Taxpayer Service Program budget has been declining since fiscal year 1980. In the fiscal year 1982 budget request, IRS eliminated direct return preparation and return review assistance at walk-in offices, although exceptions were made for handicapped taxpayers and taxpayers unable to use self-help return preparation assistance. Further, IRS has significantly reduced the number of walk-in offices in operation and has projected a decrease in the number of taxpayer contacts handled in fiscal year 1982. The IRS 1983 budget proposed even more drastic reductions in the levels of assistance to be provided to taxpayers and a change in the service program's focus; telephone assistance will be limited to responding to specific questions taxpayers have about their accounts. The refocusing of the Taxpayer Service Program may affect voluntary compliance. GAO tested the adequacy of IRS telephone assistance in 1978 and again in 1982 and found that the overall adequacy of telephone assistance had declined. IRS statistics indicated that taxpayers are finding it increasingly difficult to contact an assister via the telephone, but they did not show a decline in response accuracy. In 1979, IRS began discouraging direct return preparation by its personnel and, as a substitute, encouraged taxpayers to use self-help and/or return review assistance. These were later eliminated. To maximize the declining taxpayer assistance resources, IRS has adjusted the number of walk-in offices and the type of assistance offered. However, the decrease in taxpayer services may result in some taxpayers not filing returns or in the filing of returns containing errors. Studies have shown that taxpayers have trouble understanding IRS forms and instructions, even though attempts have been made to make the publications and forms clearer. More data are needed to determime what the effects of taxpayer service cutbacks will be on the filing of tax returns.