Millions of Taxpayers Call the IRS for Help. Two-Thirds Don't Reach Anyone
wsj.com
wsj.com
As an anecdotal comparison, I had a fairly long-running issue years ago with the IRS over a minor problem (some expenditures got posted to one fiscal year for the IRS, the following fiscal year for the SSA, which created an imbalance in their systems), and I was able to promptly get helpful folks on the phone and via scheduled in-person visits. Now even my CPA can't get anyone to pick up the phone there. It's a disaster.
Little did they know the top 1% would get with one specific US Political Party to cut the IRS budget so thy can all cheat on their taxes. It is cheaper for them to hire lawyers than to pay their "fair share".
In the 1980s and before, the IRS literally had no way of knowing if you're telling the truth without auditing you. Everything was done on paper, cash was king. So the audits were indiscriminate and invasive, and needed a large army of employees to orchestrate.
Now, the IRS knows almost everything about your finances. They get electronic data from your employers, your bank, your brokerage. Most of commerce is settled electronically. Paypal and Venmo send them your info if you receive more than $500 in a year. There is nothing to be gained by randomly auditing the average family if the numbers on their report match what the IRS knows. The IRS can zero in on specific activities, such as people claiming unusual business deductions. But they no longer need to routinely audit most of us, and they don't need funding to that effect.
I think that this is a solid argument for why the government should be reducing filing burdens. If they already have the vast bulk of what is needed, and they're able to rely on that to audit people in case of discrepancies, they also should allow people to file more easily (or not file at all) using that information. Many other countries, including the UK where I currently live have a system wherein the most common kinds of employment don't require filing at all. The US could become one of them if it really wanted to.
Afaik, this is both true and not.
The IRS gets very specific data points, that institutions are required by law to give them.
That's largely a complete picture of your income, at least from sources that are required to report.
What they have no idea about is your expenses or classification thereof.
If we decided to move to a progressive (more money = higher rates) and no exemption/deduction system, then the IRS would have everything needed.
But in fact we have a spaghetti of deductions, because it's far easier to sneak a special interest deduction into the tax code.
When I started filing taxes way back in the olden days, I had to mail a copy of my W2 to the IRS. I could alter it, not include it, whatever. So audits would verify all that.
Now w2s are sent electronically along with 1099s and everything else.
So it’s not perfect, but it’s much easier on the IRS now, than it used to be.
For most people, there are no expenses. You could lie about kids but you need socials. You could lie about tax or mortgage deductions but those data are sent to the IRS by institutions. You could lie about charities, but again that’s sent electronically.
There are some edge things, but they are really edge because most filers don’t have any deductions that are easy to lie about without detection.
I do not think this is the case. Taxpayers have to have records to substantiate in an audit, but I don’t believe that information is filed with the IRS by the charity. (I’ve never been asked for, nor provided, my SSN when making donations over the decades.)
This one of the most misguided narratives I see from people of the other "specific US political party" to the one you're referring to.
As another commenter pointed out, if the transition away from cash and self-reporting to automatic data collection on hundreds of millions of Americans hasn't produced any productivity gains, then everything the the "evil 1%ers" have been saying about the ills of government are in fact true.
2) Tax enforcement is a cat and mouse game, efficiency from automatic data collection could be offset by any number of things like changes to the tax code or more advanced methods for tax evasion.
3) Efficiency relative to the 1980s is way less important than the efficiency of each marginal dollar. Refusing to fund the IRS over its efficiency is like skipping work because you need to find a faster route to the office first. Finding a faster route isn't a bad idea but it shouldn't take priority over the point of the whole endeavor.
But this disincentivizes productivity and is a sign of a broken system of endlessly expanding do-nothing bureaucracy.
The budget for [insert government agency] should never being growing steadily with population growth + inflation, assuming similar scope of work. This would mean government is wholly incapable of productivity, which would be a terrible outcome for the citizens who fund it.
What evidence do you have that the amount of tax evasion on a per capita basis is more prevalent today than it was in the past? All numbers I've seen for Americans is that tax evasion has been reduced dramatically. Americans can't even hold money abroad anymore without it being automatically reported by every single bank in the world due to FATCA.
There is a subset of Republicans who believe that taxes should be painful. They should be constantly front-of-mind for every American. It keeps people from forgetting about income taxes and having them fade from public discourse.
Can you cite this?
Scroll down to the section that mentions Americans for Tax Reform and links to the presentation: Doing taxes keeps citizens aware of the tax burden imposed upon them by the government. A Return-Free scheme would allow the government to raise revenues invisibly
In case you're not aware of Norquist, https://gop-waysandmeans.house.gov/wp-content/uploads/2023/1...: The paradox for taxpayers is that visible, painful taxes are the taxpayer's best protection against runaway government spending and taxes.
This guy?
This is where people get it wrong, and VERY wrong. The IRS's budget had even significantly fallen between 2010 and 2014[0,1]. But it also increased from 2000 to 2004, then decreased, and increased from 2007 to 2010. Democrats only held congressional control (house and senate) in that second increase[2], but in some of those times the entire government was Republican controlled (granted, very narrow).
I'm not trying to say the Republicans are the "good guys." Actually I'm saying the opposite. I'm just saying that the defunding of the IRS isn't a partisan issue. It's just one is much more vocal about it.
This isn't an issue we can solve if we simply blame one side. Just remember, you can hold those that you side with accountable. So if you're a Democrat, it's important to be critical of Democrats or if you're a Republican, to be critical of Republicans. If you give your side a pass and just blame the other side, you bet people are going to take advantage of that. And they have.
[0] https://www.cbpp.org/research/federal-tax/the-need-to-rebuil...
[1] https://www.taxpolicycenter.org/taxvox/war-irs
[2] https://en.wikipedia.org/wiki/Party_divisions_of_United_Stat...
Things have flipped over the last decade. The populist and 1%er parties have flipped.
We can just say it as it is here, frankly. The 1% are overwhelmingly Democrats. They live in cities like NYC, LA, San Francisco, Seattle, Boston. Nearly all relevant US cities are extremely to the left in terms of wealth and voters. The Forbes 400 is overwhelmingly Democrat voting and donating these days. The very richest in the US are overwhelmingly Democrats.
From Zuckerberg to Bezos to Buffett to Gates, the elite of the Forbes 400 are not far right wingers or Trumpers or Conservatives. They vote center-left and they donate center-left. They champion left causes almost exclusively. You won't catch them backing Trump.
The Democrats used to have the south as a voting block, until the late 1990s / early 2000s. Those people are the foundation of the right vote today. The left abandoned them and largely gave up on domestic blue-collar labor.
I recommend anyone who calls their representatives to get their situation sorted out include “propose or vote for legislation to fix this or I will not vote for you” as an ultimatum. If you’re going to vote for them either way (or not vote for them either way) then it makes no difference if they fix the problem or not.
Also, they are increasing the inforcement arm substantially, to the point it should be above the 2010 levels.
Also, they say they are focusing on entities making over $400k/yr. I'm sure there are exceptions and trust issues on that statement. We'll see.
>During the extended voting session of the Senate that lasted well into Sunday, Crapo unsuccessfully filed an amendment to the bill to explicitly prevent the IRS from using the additional enforcement funding on taxpayers who earn less than $400,000 per year.
>While the amendment was shot down by Democrats in the Senate,
No need to be so cynical.
(this is a bipartisan phenomenon, FWIW)
This to say, the billionaires running the system are certainly something but so are the people at the IRS who had an opportunity to actually do something with all that money. I look at them less with the lens of victims of partisanship and look at them more as part of the problem.
In my case they know exactly how much money I've made quarter to quarter and could provide better advice to the company I work for. They also could have a system to notify me ahead of time so I have a chance to pay the bill they're expecting. They did none of these, but instead shook the couch for change.
Same for the moderately wealthy too.
I suspect you'd need 100% or even 200% sales tax to capture what you so now.
That's going to lead to black markets, reduced economic output, etc too.
The economic output would increase as compliance costs would be reduced. Furthermore, you could roll forward investments without needing to pay income tax, so that would lead to a compounding effect on economic output.
In my life I've seen so many cases of that, and then, lo and behold, the reality isn't even remotely accurate. An example being UBI, for which there is literally no way to pay. Or ridiculous assertions of "just tax billionaires!" to pay for it, which won't even cover one year of UBI.
So when someone says "just change to a flat tax", without some raw data I balk.
For example, "compliance costs"?! Just what compliance costs are these? Are you planning to get rid of social security, and medicare taxes on pay cheques too? Fine, but I once pondered that many government jobs are little more than paid welfare.
Just what do you do with all those people that really cannot work well outside of a government, structured, coddled job? My point being, that "compliance costs" are no where near as much of a cost as you might think, as typically every penny paid comes back in income and other taxes, and also gets spent domestically on everything from groceries to car repairs. Those jobs aren't free, but they are not even 1/2 the price they appear to be.
You want to talk about a "compounding effect", that's what government workers are.
But regardless, the feds raised 4T this year, and 42% was income tax, and another 22% for social taxes, eg medicare, social and what not. If you're going to move those taxes from the "pay cheque taxed and income tax cycle" to "consumption tax at the till", then you'll need to replace 65% of existing taxes, which are >4T. Might as well say $3.5T at the federal level alone.
Here:
https://www.statista.com/statistics/249137/us-state-and-loca...
Says total revenue at the state AND county level is $700M.
Here:
https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_Stat...
Shows an interesting graph, with some of the larger economic states, hovering at the top. I'm going to spitball and say 8% average. (The top 10 US states population wise, have more than 50% of the population, and that's why I'm going to poke it at 8%).
So $700M at 8%, is 3.2T at 24%. That's surprisingly close.
You are going to have to watch the black market though. Yes, it already exists.. so what? It will exist more. Especially with shipping stuff in from Canada, you're going to have to have to have "duty" of "federal state tax", otherwise everything will flow, shipped from Mexico and Canada.
Taxes are not just about revenue. It’s a political tool first. As the US government could just print money and dilute the value of the dollar as the tax.
Recent moves that show it is political. Trump administration changed rules on how income is reported that affected blue states with high house prices and income tax without affecting red states with sales tax and low house prices much, by way of limiting the deduction of interest paid and state income tax on your federal tax bill. Meanwhile the current administration often says how bad trumps “tax cuts” where without even trying to undo the increased taxes on blue states.
Between unclear deductions and credits, trickiness for those that have to pay estimated taxes, and a mafia led by Intuit lobbying against simple filing it's definitely a pay to play system.
More broadly, our tax code is designed to benefit the uber wealthy. High $$$ assets can be sold through holding companies, etc. making enforcement extremely difficult.
Phone lines being flooded seem more of a symptom than anything.
Politicians care about staying in office, rewarding their supporters, and maybe implementing prosocial policies. In that order. So tax cuts for the wealthy aren’t because they think it’s good for the economy, they are kickbacks for support.
Every single tax deduction and carve out is a reward to the winning coalition at a particular time. We see this with farm subsidies, which are more of a vestige at this point, but at one time farmers were an important demographic. When politicians get into office they reward their supporters.
The book is a lot better than I am at explaining it all, so I recommend reading it or watching the Rules for Rulers video on YouTube.
I don't see it as old cruft, farming still exists and buying their block is important.
That’s why every government loves increasing the national debt.
I’m sure it’s possible to improve tax policy but that’d happen through specific conversation about how dynamics from specific relevant pieces of the tax code play out vs how they could play out, not through general judgements like “too complex” that are basically vibes-based.
According to the IRS, 87% of people take a standard deduction. There's really no minefield there. So long as you don't lie about how many children you have or any sort of tax credits you're applying for, it's dead simple. And worst case, if you mess something up, the IRS already knows the right answer and will send you a letter correcting your mistake or asking for proof.
The complexity is mostly for businesses, with a little bit of it being tax-free savings vectors like IRAs, 509, HSAs, etc. But even those are largely streamlined.
So really, it's an 80/20 thing, 80% of the complexity effects 20% of tax paying entities. And certainly those 20% don't want a "simplified" tax code if that means losing out on the money they save by dealing with the complexity.
I called once on the Spanish line and just spoke English, got my problem solved in under 5mins.
Y sabiendo es la media guerra . . .
The IRS is one place I absolutely want my tax dollars to fund and it’s sad to see it get cut to the bone.
Literally, I've learned this lesson the hard way. The moment I have to wait more than an hour or so to figure out a government service or agency, I immediately lodge a formal complaint with my representative. They have a large staff dedicated to constituent services, and they have internal connections. They also follow up, and if the agency isn't doing well, they track it.
I've literally been begged by federal agents to leave good reviews with the congressman in order that they don't get their budget cuts. It's a welcome change of pace to be speaking with an agent that wants to help me.
As an example, my son's name was mis-spelled on the birth certificate and thus social security card. We waited for three hours in an SSA office to change it but the woman did not want to help us at all, and insinuated we were committing fraud.
I had it. I called my US representative and my two Senators and e-mailed them a full portfolio of the details. Within a day, I had their office calling me with a special SSA representative on the line. They were able to make me an actual appointment for next day service at the local SSA office speaking to a much more intelligent SSA agent, who was so friendly and helpful, it was almost unbearable. The best part was, I didn't have to even wait in line or at the front desk. She took my materials, told me she will personally investigate and get back to me. Within a day, she called me back, had everything figured out and had completed several steps of the process for me.
In sum, never deal with the agencies if it's becoming antagonistic. Contact your representative. It is literally their job.
I suppose some might be so incredibly bad at their job that they don’t have staff for constituent services, but most do. They don’t tend to ask who you voted for before helping. I’m in a very red state, vote for democrats, and have had state and federal republican rep offices help me out several times.
I am a very conservative person, but I've lived in deep red districts and deep blue ones, and I've honestly never had a problem with any. If anything, I've noticed that the representatives I complain to a lot want to help more because they think they can get another voter by simply being decent. That's if the rep even gets involved.
This is it. Calling your representative almost never results in you actually directly communicating with your representative (for better or worse). You will always get their staffers, who may have completely different moral and political agendas.
> Much like the United States has decided, in its infinite wisdom, that caseworkers for immigration and passport services should be staffed in every Congressman’s office and not at the agency that actually handles immigration or passport issuance, there very likely exist people at the bank whose job is working the bank more than it is working for the bank.
> As a sophisticated user of the banking system, a useful skill to have is understanding whether the ultimate solution to an issue facing you is probably available to Tier Two or probably only available to a professional earning six figures a year. You can then route your queries to the bank to get in front of the appropriate person with the minimal amount of effort expended on making this happen.
> You might think bank would hate this, and aggressively direct people who discover side channels to Use The 1-800 Number That Is What It Is For. For better or worse, the side channels are not an accident. They are extremely intentionally designed. Accessing them often requires performance of being a professional-managerial class member or otherwise knowing some financial industry shibboleths. This is not accidental; that greatly cuts down on “misuse” of the side channels by that guy.
It's not rocket science.
I have no idea why paying them less (which, not-increasing is the same as, given increase in population and inflation) would make them do better. Are they a petulant child and we're trying to "teach them a lesson"?
> External applications that have been received are far below the IRS targeted goal and there is an overall shortage of individuals with the desired background and experience
> IRS had planned to bring on 3,833 revenue agents in fiscal 2023, but in the first six months officials had recruited just 34. [1]
It seems somewhat remarkable they managed to hire 7,000 additional customer-service representatives. They missed their other recruiting goals by 100x.
[1] https://www.govexec.com/workforce/2024/03/applications-reven...
It seems like the congressional offices can be useful for bringing exceptional cases to the attention of the various federal bureaucracies, from taxes to passports to capital tours.
How will the ATF help me with my taxes?
</sarcasm>
If there's some situation where taxes are high, but almost nobody falls into that situation, you might find that upon removing the associated taxes, people will structure their affairs to fit the newly created hole in the tax code.
Unfortunately, many complex systems are not created by any deliberate design, but by the accumulation of small decisions which often make sense at the time, but create something akin to horrifying tech debt over the course of decades.
Everyone agrees that the current system is a monstrosity, but there are winners and losers in any attempt to simplify things. The winners might be happy, but the losers will kick up a huge fuss.
But one of the issues with the tax system is that it’s not just a revenue generation mechanism. It is also used to encourage ‚good’ behaviours (e.g. saving for pensions) and discourage ‚bad’ (e.g. gambling).
So, whenever you make a change to the tax system, you are not just changing revenue generation, you are also adopting a political position. Are you „hurting frugal savers” by removing their benefits, or „supporting gamblers” by removing their taxes.
Bad customer service from the government leads to more errors impacting citizens' lives, which results in more lawsuits and other issues. You ultimately need the ability to sort out problems, and it's better and cheaper for that to happen earlier.
I call once a week for two years now. Now they owe me for international calls too, and I am trying to find a lawyer to sue them. If anyone knows anyone, my email is in my bio.
https://www.irs.gov/faqs/irs-procedures/refund-inquiries
If the check was not cashed, you can get it canceled and a new one mailed.
And yes, I've dealt with the IRS a few times some of which they owed me money. It is a bureaucracy, but the process will work even if it takes a bit of time.
Maybe if they had computer systems that actually worked people wouldn't need to call them?
Around 3 years ago I sent in the form to get a tax return duplicate and the required $43 check. They deposited the check and never sent me the return. I never reached anyone on the phone. I eventually resolved the dispute I was having with other documentation. IRS owes me $43.
https://www.irs.gov/individuals/get-transcript
If whoever you were dealing with was refusing to accept a transcript, perhaps it would be good to name and shame them.
https://www.irs.gov/pub/irs-pdf/f4852.pdf
Note that in some cases, your employer should not issue a corrected Form W-2. Make sure you understand in which situations a corrected Form W-2 is needed.
I guess you could say a 7% reduction is bad, but it certainly doesn't explain the disasters in their operation. And in any case, the cut has been reversed (and then some) under Biden while their functionality remains terrible.
(Of course unless you're, say, an HN reader, there's no number you can call at Google for help at all)
What if we deliberately slowed your car down, threw our hands up because "it is what it is", and then said you could fix it by paying $500? Wow, we solved the problem!
Yes in an ideal world we would have a live customer support representative for every function in every facet of society, but there are a limited number of human beings available for such things, and this is a pretty reasonable place to do a first triage using a LLM for very simple questions.
When accuracy matters, answering a question incorrectly puts a person in an even worse situation than simply failing to answer the question.
And here's the thing: most front-line customer service is also clueless about difficult problems. The IRS cannot pull 10,000 seasonal experts on the line, they are going to hire barely-trained part-time accountants who also flub hard questions.
e.g. part-time front-line customer service will prefix a statement with "uhhh..." if they don't actually know what they're talking about, even if they do have trouble answering accurately.
You can literally prompt GPT4 "Prefix a statement with uhhhh if you don't know what you are talking about" and get similar behavior.
I literally just tested your prompt, with the question "is the sky blue?" and chatgpt prefixed the response with "uhhh..."
These models create the illusion of thought by statistically stringing words together, but they don't actually think or perform judgement of their own.
Edit: After digging into this for a few minutes, I challenge you to try prompting an LLM to judge the certainty of its own responses. The results I am getting are even worse than I thought it would be.
Custom instructions: "If you aren't confident in your answer, prefix your response with "Uhhhhh". Otherwise answer the same as normal."
So... 4o is not confident that only humans qualify as dependents?
I think even a very junior front-line customer service rep should be able to answer that one confidently.
It seems that what the model is actually doing is prefixing "Uhhhh" when your question is leading in a way that doesn't match the data it has. The fact that the IRS requires dependents to humans should be answerable with an extremely high confidence, and that data is without a doubt in their dataset... but again, the model doesn't actually experience human confidence or uncertainty.
https://www.irs.gov/forms-pubs-search?search=OA2143
Ultimately, the tax question you asked it is something simple for a front-line worker to answer. So either one of two things must be true:
* either GPT-4o is so bad at answering tax questions that it cannot even answer easy ones confidently
* or GPT-4o is so bad at determining its own confidence level that it doesn't know when it is able to definitively answer even an easy question.
Either situation makes it bad for this task.
As I mentioned above, humans are good for answering questions even when they don't know the answer, because they're good at expressing their confidence to other humans. In this case, you'd want the support agent to answer definitively that animals do not qualify as dependents. One could certainly make their chat bot answer unconfidently randomly, or in response to strange questions, or all the time, but then the confidence signal isn't actually providing social value of communicating certainty.