Most Serious Problem #3: Online Records Access
Taxpayer Advocate Service44
Most Serious Problems
MOST SERIOUS PROBLEM #3: ONLINE RECORDS ACCESS
Limited Electronic Access to Taxpayer Records Through
an Online Account Makes Problem Resolution Difficult for
Taxpayers and Results in Inefficient Tax Administration
RESPONSIBLE OFFICIALS
Karen Howard, Director, Office of Online Services
Eric Hylton, Commissioner, Small Business/Self-Employed Division
Kenneth Corbin, Commissioner, Wage and Investment Division
TAXPAYER RIGHTS IMPACTED
1
• e Right to Be Informed
• e Right to Quality Service
• e Right to Pay No More an the Correct Amount of Tax
• e Right to Challenge the IRS’s Position and Be Heard
• e Right to Retain Representation
• e Right to a Fair and Just Tax System
EXPLANATION OF THE PROBLEM
As the IRS moves forward with putting taxpayers first in delivering its strategies, it must continually
emphasize innovation and creativity to ensure success. To provide top quality service, as measured through
the eyes of the taxpayers, the IRS needs to consistently leverage existing technology and identify emerging
programs to pursue innovative solutions and improvements. One area for improvement is its online access
to taxpayer records. Due to limited technology systems, the IRS operates under a largely paper-based system,
requiring taxpayers to keep copies of paper correspondence, call the IRS for assistance, or use a patchwork
of electronic applications to gather necessary information to meet their tax obligations. is system leads to
inefficiencies because taxpayers lack the ability to access necessary filing information, resulting in taxpayer
delays and dissatisfaction with tax administration. Taxpayers must have a simple way to access their IRS tax
records and account information to meet their tax filing and payment obligations.
Despite the many benefits of digital communication and online accounts, it is critical the IRS maintain
telephone and in-person service options. Millions of taxpayers still do not have access to broadband internet,
while other taxpayers strongly prefer to interact with the IRS by telephone or in person for certain categories
1
See
www.TaxpayerAdvocate.irs.gov/taxpayer-rights. The rights contained in the TBOR are also
codified in the IRC.
See
Most Serious Problem #3: Online Records Access
45Annual Report to Congress 2020
Most Serious Problems
of transactions.
2
For these reasons, we believe it is essential that the IRS maintain a robust omnichannel
service environment while it enhances its digital offerings.
3
ANALYSIS
Robust Online Accounts Would Modernize Information Sharing Between the IRS and
Taxpayers
Technology is reshaping how taxpayers and the IRS communicate with each other. e commercial growth
of online services has heightened taxpayers’ expectations for quality online services they can use to conduct
tax communications and transactions. For years, the IRS has steered taxpayers toward digital self-help and
has continuously expanded its offerings of digital service options. However, many of these offerings are
standalone systems, they do not offer complete information, and they are not available to all taxpayers. As the
IRS continues to resume its business operations that were partially or completely shut down at the inception
of the COVID-19 pandemic, it should continue to evaluate what it needs to do to administer the tax laws and
provide necessary taxpayer services, especially under similar conditions in the future.
Because financial institutions and other state tax agencies
4
provide access to key information online, customers
have come to expect secure and convenient access to their personal information with features such as:
• View account balance and tax year or account period details;
• View estimated payments and credits before filing a return;
• View payment history;
• View a list and images of tax returns;
• View a list and images of notices and correspondence;
• View and update contact information;
• View proposed assessments;
• View a list of authorized representatives (tax professional or a tax professional with a power of attorney)
and manage who can access their account;
• View a list of activities that occurred on their account, such as the last time the taxpayer or their
authorized representative accessed the account;
• Calculate a balance due for a date in the future;
• File a power of attorney (POA);
• File a nonresident withholding waiver request;
• Protest a proposed assessment;
• Chat with a customer service representative about confidential matters;
• Send a secure message with attachments;
• Receive an email when a notice or correspondence is sent; and
).
).
See
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Taxpayer Advocate Service46
Most Serious Problems
• Allow an authorized representative full or partial access to the taxpayer’s Online Account records and
information.
e National Taxpayer Advocate recognizes the IRS is aware of these customer expectations and is progressing
toward providing similar services as soon as possible. However, due to years of limited funds, the IRS has
only been able to add some online services in a piecemeal fashion. Taxpayers deserve better service from the
IRS. e COVID-19 pandemic highlighted the necessity of robust online services for taxpayers and their
representatives.
Since 2016, the IRS has offered taxpayers an Online Account application. Over time, the capabilities and
popularity of the Online Account have increased. Taxpayers accessed the Online Account application over 23
million times in fiscal year (FY) 2020.
5
As shown in Figure 1.3.1, the IRS has provided several other online
applications to assist taxpayers. Because the Online Account does not reflect all the information from these
other applications, there is no consolidated place where taxpayers can view all their information.
FIGURE 1.3.1, IRS Online Self-Assistance Applications
6
Application
Name
Taxpayer Function
Information
From
Application
Reflected in
Online Account
Type of
Taxpayer
Account
Number of
Transactions
or Sessions,
FY 2019
Number of
Transactions
or Sessions,
FY 2020
Online
Account
make a payment online, request a
or access tax records via Get
Transcript
N/A Individual
Number
unavailable
23,000,000
Get
Transcripts
Online
Retrieve a variety of transcripts
online to view, print, or download
Yes Individual 20,861,000 46,064,000
Get
Transcripts by
Mail
Receive a return or account
Yes
Individual
and
Business
2,545,000 2,156,000
Where’s My
Refund
Learn status of refund No Individual 368,841,000 758,260,000
Where’s My
Amended
Return
No Individual 5,340,000 4,743,000
Direct Pay
Pay directly from bank account Yes Individual 9,420,257 11,841,916
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47Annual Report to Congress 2020
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Application
Name
Taxpayer Function
Information
From
Application
Reflected in
Online Account
Type of
Taxpayer
Account
Number of
Transactions
or Sessions,
FY 2019
Number of
Transactions
or Sessions,
FY 2020
Online
Payment
Agreements
certain taxpayers
Yes
Individual
and
Business
786,000 844,000
ID Verify
process a federal income tax return
taxpayer identification number
No Individual 132,000 211,000
Get an Identity
Protection
Personal
Identification
Validate identity and retrieve an
Identity Protection PIN online
No Individual
Number
unavailable
488,000
Modernized
Internet
Employer
Identification
Number
Apply for and receive an employer
web
No
Individual
and
Business
4,990,000 6,914,000
Transcript
Delivery
Service –
Reporting
Agents
Retrieve a variety of account
online
No
Individual
and
Business
237,000 374,000
Transcript
Delivery
Service –
States
Retrieve a variety of account
online
No
Individual
and
Business
534,000 604,000
Transcript
Delivery
Service –
Third Parties
Retrieve a variety of account
online
No
Individual
and
Business
104,127,000 108,119,000
Income
Verification
Express
Retrieve transcripts from an online
secure mailbox to verify income of
a borrower
No
Individual
and
Business
14,027,000 16,696,000
Free
Application
for Federal
Student Aid
the Web
Access tax return information and
form
No Individual 18,691,000 27,498,000
Tax
Withholding
Estimator
underpayments
No Individual
Number
unavailable
8,193,000
Interactive
Tax Assistant
Receive answers to basic tax law
questions
No
Individual
and
Business
1,198,000 3,236,000
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Below we will discuss the challenges taxpayers are facing and why the IRS must upgrade its systems and
provide a robust Online Account for all taxpayers and its employees to assist taxpayers with issues.
Taxpayers Struggle Navigating a Piecemeal System of Online Applications That Have
Limited Capabilities and Incomplete Information
As shown in Figure 1.3.1, taxpayers’ usage of online applications demonstrates their desire to obtain their
information electronically. However, the present system has many downfalls. e IRS has not fully integrated
information and access between online applications and a taxpayer’s Online Account. e information
from the Where’s My Refund tool is not available in a taxpayer’s Online Account, and during 2020, the
information from Get My Payment (Economic Impact Payment) tool was also not incorporated into the
Online Account.
7
Taxpayers wanting to know the date the IRS received and processed their tax returns would
not know which transcript to review, and even then, the transcript may be confusing to a taxpayer. For
example, for taxpayers who filed their return before the due date, the transcript lists the tax return received
date as the due date of the tax return with no explanation. e transcript may list a return posted date that is
later than the date the IRS issued a refund, further confusing the taxpayer. e taxpayer may also have to wait
months after filing a return to see the information in a transcript in the Online Account. Wage and Income
transcripts are not available until mid-May of the processing year.
8
e IRS made some key updates in
September 2020 so that the Online Account immediately shows electronic payments, which means taxpayers
do not have to wait until the payments show up on a transcript to confirm them.
While taxpayers can access some applications through the Online Account, such as Get My Transcript and
the Online Payment Agreement, others such as the Identity Protection PIN are only available outside the
Online Account. Taxpayers using IRS online applications for the first time may face difficulty authenticating
their identities.
9
Some applications have a common login and password; this can actually be a problem for
taxpayers who may have accessed an application years ago and misplaced their login information or perhaps
forgot that they had used another application.
10
Another issue is that each application is limited in what taxpayers can accomplish. For instance, the Online
Payment Agreement is limited to individual taxpayers whose tax debts are below $50,000 ($100,000 if
requesting a full pay agreement)
11
and business taxpayers with a balance of $25,000 or less.
12
Taxpayers
seeking an installment agreement outside of the IRS’s streamline criteria must mail or fax in their request
forms rather than using an online application. Similarly, taxpayers seeking an offer in compromise can use the
IRS’s online Offer in Compromise Pre-Qualifier tool to learn if they qualify but then cannot submit the offer
online; rather, they must mail or fax in the forms.
13
infra
.
10
11
12
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49Annual Report to Congress 2020
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Taxpayers cannot access all the information they need through an online application. For example, the
transcripts available through the Get My Transcript application do not provide the taxpayer with the actual
tax return information, which a taxpayer might need to verify which child he or she claimed as a dependent
on a return. e only way for the taxpayer to view a copy of the actual return filed is to mail a request to
the IRS, pay a $43 fee, and wait up to 75 days.
14
Additionally, it can take up to five months after filing a
tax return for the transcript viewable in the Online Account to reflect the return information.
15
Many of
the IRS’s electronic applications are not available to business taxpayers, including Where’s My Refund, Get
Transcript Online, and the Online Account.
Some of the online applications only provide information temporarily, lacking the capability for the taxpayer
to view the information later. An example is the employer identification number (EIN) application, which
allows taxpayers to apply for an EIN online and receive it immediately once approved. e IRS warns that
once it provides the EIN confirmation notice, it can never regenerate the notice, even if the taxpayer needs
a copy to show proof of the EIN, so taxpayers should save a copy.
16
Taxpayers who need to verify their
information to file a return must call the IRS if they have lost a copy of the EIN notice.
e IRS created the online application, Where’s My Refund, which provides basic information such as an
acknowledgement that the IRS received the tax return. However, for some taxpayers, the application only
supplies a reference code and an IRS phone number, requiring them to call to learn basic information such as
if the IRS applied their refund to an outstanding balance due for another tax period.
17
When the IRS holds
a taxpayer’s refund and asks the taxpayer to verify identity, income, or withholding, the taxpayer must wait to
receive a notice in the mail rather than having the ability to be notified or respond online. Once the taxpayer
submits a response, he or she does not know if the IRS received the response or is processing the refund until
he or she receives another paper notice or the refund itself. From January 1 through October 2, 2019, the IRS
took more than four weeks to release taxpayer refunds it held for potential non-identity theft refund fraud.
18
With an integrated Online Account system, these taxpayers could access further information about the
status of their refunds, submit inquiries about their account, or provide the required information. Security,
uniformity, and ease of use are key to successful online applications, including a robust Online Account.
14
15
June.
16
17
further assistance.”
18
Security, uniformity, and ease of use are key to successful online
applications, including a robust Online Account.
Most Serious Problem #3: Online Records Access
Taxpayer Advocate Service50
Most Serious Problems
Taxpayers Have an Urgent Need for Full Access to Their Information in the Online
Account Now
Although the IRS is working on several initiatives related to the Online Account, taxpayers cannot afford to
wait years for these changes. In FYs 2021-2022, the IRS plans the following actions:
• Expanded Online Account: Taxpayers will be able to make a payment, and certain taxpayers can create
a short-term payment plan within their Online Account.
• Tax Professional Account: Tax professionals and taxpayers will be able to establish digital authorizations
(Form 8821, Tax Information Authorization) and Power of Attorney (Form 2848, Power of Attorney
and Declaration of Representative) with eSignature.
• Secure Document Exchange: More individuals and large and small businesses will have expanded access
to secure messaging and file sharing.
• Authentication: Some digital self-service applications will have new, more secure ways to authenticate,
meeting governmentwide digital identity guidelines.
• Expand Digital Notifications: Taxpayers will be able to view electronic (PDF) copies of additional
notices not previously available in the Online Account and opt-out of paper delivery for some notices.
• Digital Signatures: Authenticated taxpayers and representatives will be able to electronically sign and
submit certain forms and documents.
19
In FYs 2023-2025, the IRS plans to further expand the Online Account by allowing taxpayers to update
contact information and use secure two-way messaging.
20
e IRS introduced new functionalities in its Online Account that allow taxpayers to view a few specific
notices and navigate to a message center.
21
It also plans to implement a feature to alert taxpayers to new
notices. ese are positive steps, but they fall short of what taxpayers need right now. As of late 2020, only
six notices are available in the Online Account, with another five planned for mid-2021.
22
Of the notices
chosen, most are purely informational notices about adjustments or other past actions. e IRS should
instead prioritize notices that provide statutory rights and deadlines to act, such as the statutory notice of
deficiency, providing an opportunity to challenge the liability in U.S. Tax Court; the math error notice,
providing the taxpayer 60 days to request an abatement; and the Collection Due Process (CDP) hearing
notice, providing 30 days to request a CDP hearing.
23
During FYs 2017-2019, the IRS received an average
of 6,745 delinquent CDP hearing requests each year.
24
Placing important notices with deadlines to exercise
taxpayer rights in the Online Account could make it easier for taxpayers to keep track of the deadlines and
19
20
Id
.
21
22
23
See
24
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51Annual Report to Congress 2020
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exercise their rights. Although the IRS has set a target for placing more notices in the Online Account during
FY 2022, it does not have a definitive plan for how many notices it will be adding to the Online Account,
when it will add them, and how they will be prioritized.
25
e IRS has beneficial elements planned for the Online Account, including the ability to select language
preference for future notices, change the taxpayer’s address, and view alerts that new notices have been posted
within the taxpayer’s Online Account.
26
However, the IRS could do more to notify taxpayers about the
status of their accounts. While the Online Account already includes certain notifications at the top, they are
primarily broader public service style messages one might find on IRS.gov, such as the availability of disaster
assistance or a reminder to file a return if the taxpayer has not done so.
27
ere are only a few notifications
specific to the taxpayer, such as if the taxpayer is in jeopardy of a lien or levy or if a short term payment plan is
past due.
28
e IRS could be tailoring more notifications to specific taxpayer situations, such as if the taxpayer
had a deadline to provide documentation in an examination case.
e IRS is also planning future capabilities for its online application related to POA authorizations, the
Tax Professional Account. By the third quarter of FY 2022, the IRS plans to allow users to view and cancel
pending requests, view and print confirmation of a submission, view and resubmit incomplete requests
due to system error, and save data entries across sessions.
29
Further, the IRS plans to give taxpayers and tax
professionals the ability to view and print authorizations by the third quarter of FY 2023. While positive,
these developments are still years away. To support representatives and taxpayers, the IRS must prioritize an
online application for representatives that allows them to view tax information for their clients for the years
they hold an authorization. Without this access, representatives must rely on paper mail, or they may ask
taxpayers to give them access to their personal Online Accounts, potentially jeopardizing the taxpayer’s privacy
and security. e IRS states it has no plans for the Tax Professional Account to include external notifications,
which slows down the ability for representatives to help clients since clients may not know when a document
needs a signature or when the IRS has processed an authorization.
Unfortunately, there are several Online Account features not planned, such as the ability for taxpayers to view
images of their past tax returns and information returns filed by third parties; file documents and request
actions (e.g., request a CDP hearing, field assignment, or Appeals hearing); view IRS employee contact
information for any open Examination, Collection, or Appeals action; and view the status of compliance
interactions (e.g., the IRS received documentation and the examiner is reviewing).
Additional Complexities Due to COVID-19
e pandemic and resulting impact on taxpayers emphasized the urgent need for a robust Online Account.
During the pandemic, the IRS took the unprecedented step to protect the health and safety of its employees,
their families, taxpayers, and local communities by shutting down some of its operations for months,
including notice printing sites. e IRS had already digitally created many notices and placed them in the
printing queue. Months passed, and when the IRS printed and mailed the notices, they still reflected the
25
26
Id
.
27
Id
.
28
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original dates, including due dates. Taxpayers’ accounts of record reflected the original date on the notices,
not the later date when the notices were mailed.
e total backlog, meaning all notices that were created but were not able to be printed and sent out on
the date appearing on the notice, was approximately 31.2 million notices.
30
However, when addressing
this backlog, the IRS did not treat all notices similarly, leading to taxpayer confusion. We anticipate future
challenges as taxpayers and the IRS work through the different notice scenarios:
• e IRS purged approximately 12.3 million notices and never sent them, but they may still appear on
the taxpayer’s account of record;
31
• e IRS purged approximately 543,000 notices, regenerated them with new dates, and later sent them
out;
32
• e IRS sent approximately 1.8 million notices with original dates on the notice that were prior
(sometimes by months) to when they were mailed, but included an insert explaining that the taxpayer
had additional time to take an action;
33
• e IRS sent approximately 38,000 notices with original dates on the notice prior to when they were
mailed, and taxpayers received a subsequent notice explaining they had additional time to take an action,
but the subsequent notice failed to include a copy of the original notice;
34
and
• e IRS sent approximately 18 million notices with original dates on the notice prior to when they were
mailed but included no insert or subsequent notice providing an explanation.
35
Despite the IRS’s efforts to prioritize which backlogged notices it should mail first, which notices were
statutorily required, and which notices had incorrect dates and required an explanation or new deadline, the
lack of transparency and communication created a situation confusing for IRS employees, taxpayers, and
representatives, impairing their ability to effectively comply and increasing levels of stress. For example, some
taxpayers may have received no communication from the IRS for months during the COVID-19 emergency
when they had a balance due with interest accruing. is was due to the IRS purging certain balance due
notices and then not recreating and mailing them for approximately six months.
36
Conversely, for notices that
were not purged but sent out as generated when the printing sites reopened, some taxpayers received demands
for payment even when they had already made a payment.
37
An Online Account would have allowed the IRS to electronically post the notices and create an alert
informing taxpayers to help mitigate the confusion. Taxpayers who received a backdated CDP hearing notice
may have been especially confused, as some received an insert with their notices providing one date to request
30
31
Id
.
32
Id
.
33
Id
34
refund disallowance.
35
36
37
AX N TODAY
Most Serious Problem #3: Online Records Access
53Annual Report to Congress 2020
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a hearing,
38
while other taxpayers later received an additional notice providing a different date to request a
hearing. Viewing copies of these notices online would help taxpayers confirm whether their notice provided
the first revised deadline or the second. Although the situation is understandable, it is unacceptable for the
IRS to issue almost 20 million notices that create confusion and uncertainty.
39
Another area where a robust Online Account would have mitigated problems with the COVID-19 emergency
is incoming mail from taxpayers. During June 2020, the IRS had a backlog of 12.3 million pieces of
unopened mail,
40
with 5.3 million remaining in early October 2020.
41
Taxpayers’ paper refund returns and
identity theft documentation supporting the validity of the refunds sat unopened and unprocessed.
e IRS provided for “digital transmission” of Form 1139, Corporation Application for Tentative Refund, and
1045, Application for Tentative Refund, which allow taxpayers to claim quick refunds (tentative allowances)
for prior year minimum tax liability and net operating loss deductions pursuant to the Coronavirus Aid,
Relief, and Economic Security (CARES) legislation.
42
Still, the “digital transmission” did not mean taxpayers
could submit forms online; rather, they were merely given the option to fax in their forms. Having a portion
of the Online Account where taxpayers could file key forms or requests would have provided an additional
resource for taxpayers to quickly receive their tax benefits provided in the pandemic relief legislation rather
than deal with delays and uncertainty.
Greater Taxpayer Access to Online Records Will Also Benefit the IRS and TAS
e IRS expects to save millions of dollars in postage and printing by placing taxpayer notices in Online
Accounts.
43
Placing additional information about the status of taxpayers’ accounts could reduce customer
service representative time as fewer taxpayers would need to call in to learn about the status of their case in
examination or collection, confirm whether the IRS received and processed a document, or discover which
power of attorneys are on file for which tax years. Online Accounts could free up valuable customer service
representatives for taxpayers who can only use the telephone or mail to contact the IRS. During FY 2019,
the Wage and Investment exam line received over one million taxpayer calls.
44
A survey of taxpayers who
underwent correspondence examinations revealed that over 40 percent called the correspondence toll-free line
simply to check the status of their audit with the majority calling more than once.
45
Some taxpayers reported
calling solely to inform the IRS they had sent the requested documentation.
If the IRS posted notices in the Online Account and provided a notification page where taxpayers could see
what information the IRS is requesting and the related due dates, taxpayers may provide the information
38
39
40
41
42
See
43
44
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more quickly, potentially resulting in shorter cycle times for examinations and collection cases.
46
Finally,
placing information online such as past tax returns, information returns filed by the third parties, and clear
due dates for filing forms and making payments will likely result in fewer taxpayer errors and a greater number
of taxpayers meeting their filing and payment obligations on time.
47
Because the U.S. tax system is built on
voluntary compliance, the IRS benefits greatly from providing top quality service and increasing trust with
tax administration, leading to more taxpayers meeting their tax obligations on their own and reducing the
need for compliance actions. e IRS recognizes the need to expand secure digital options for taxpayers and
professionals to interact efficiently with the IRS while maintaining and improving traditional service options
but has lacked the IT funding to move forward with the speed and accuracy required by taxpayers.
48
TAS receives many cases each year related to IRS delays. During FYs 2018-2019, TAS received approximately
a quarter of its cases under criteria five or six, meaning the taxpayer experienced a delay of more than 30 days
after the IRS’s promised deadline to resolve a tax account problem or had not received a response or resolution
to the problem or inquiry by the date promised.
49
Viewing the status of a case in examination, appeals,
collection, or another part of the IRS would keep taxpayers informed about where their case stood and may
mitigate the need for a TAS case. TAS works with the IRS to provide taxpayers with copies of IRS notices.
Placing all notices online would allow TAS to focus more on obtaining relief for the taxpayer without the
added time and burden of establishing the paper trail between the taxpayer and the IRS.
CONCLUSION AND RECOMMENDATIONS
Although the IRS has taken positive steps and plans to expand online applications to provide greater access
to information, there still remains a large gap between the IRS’s offerings and the robust online experience
taxpayers need and a quality tax administration requires. e COVID-19 emergency highlighted the
46
20
47
48
49
See
Because the U.S. tax system is built on voluntary compliance, the
IRS benefits greatly from providing top quality service and
increasing trust with tax administration, leading to more
taxpayers meeting their tax obligations on their own and
reducing the need for compliance actions.
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55Annual Report to Congress 2020
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downfalls of relying on paper. Although the IRS has contemplated many improvements to the Online
Account, the National Taxpayer Advocate recommends expediting the completion date of improvements
such as integrating a case management system, providing business taxpayers with full access to the same
information individual taxpayers have within the Online Account, and integrating secure messaging and
document upload capabilities. Without additional funding, the IRS cannot timely expand its Online
Account, which requires taxpayers to rely on the phone and mail for their tax records, resulting in taxpayer
burden and harm.
Preliminary Administrative Recommendations to the IRS
e National Taxpayer Advocate preliminarily recommends that the IRS:
1. Provide business taxpayers access to Online Accounts.
2. Prioritize posting to the Online Account notices that provide the taxpayer with statutory or
administrative rights, a deadline for action, or notice of a potential intrusive enforcement action, such
as levy.
3. Develop a timeline for when all remaining notices used by the IRS, outside the 11 notices already
scheduled, will be available to be viewed within taxpayers’ Online Accounts.
4. Update the programming for the Online Account application so taxpayers can view available notices
that were issued prior to when the taxpayer signed up for the Online Account.
5. Provide access to all self-assistance online applications through the Online Account.
6. Update and consolidate Online Account information to reflect information from all other IRS online
applications.
7. Integrate secure messaging so that taxpayers can initiate and view messages and upload and download
documents to and from the IRS within their Online Accounts.
8. Place taxpayer-specific alerts and notifications on the main dashboard of taxpayers’ Online Accounts to
notify them of the status of their cases and specific deadlines for action.
9. Allow taxpayers to add, change, or remove authorized representatives through the Online Account.
10. Allow taxpayers to give authorized representatives access to Online Account records for the authorized
tax years.
11. Allow taxpayers to update their address and other contact information through the Online Account.
12. Allow taxpayers to make certain requests and file certain forms through the Online Account, such as a
CDP request, a penalty abatement request, or a tentative carryback application for refund where e-file
is not otherwise available.
Legislative Recommendations to Congress
e National Taxpayer Advocate recommends that Congress:
1. Continue to fund the technological upgrades the IRS requires to provide an enhanced level of service
that the country deserves to improve its overall operations.
2. Provide sufficient funding for the Business Systems Modernization account to enable the IRS to
replace its 1960s technology systems, create an integrated case management system, and offer robust
Online Accounts for taxpayers and practitioners.
50
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(
).
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IRS COMMENTS
We agree with the National Taxpayer Advocate on the need for robust online services as one part of
our omni-channel approach to customer service consisting of internet capabilities, correspondence,
telephone, and face-to-face interactions. We have focused for several years now on prioritizing,
building and delivering the services that are most needed, while also considering feasibility given
significant resource and technology constraints. e IRS systematically reviews taxpayer and
stakeholder feedback, market research, and strategic priorities to inform our product prioritization
and development.
Since launching Online Account for individual taxpayers in 2016, the IRS has added many new
features using an agile development process with releases approximately every nine weeks. e IRS
has a long list of ideas and must continuously prioritize which features to work on with the available
capacity, taking into consideration the taxpayer and business benefit and the level of effort. e
team has prioritized features that don’t otherwise exist online, or where there were opportunities for
significant user experience improvements. Current features available to individual taxpayers via their
Online Account include personalized messaging on the home page with reminders to file, lien or
levy status, payment plan details and status, and any pending payments. Additionally, in November
we added a Message Center where taxpayers can view and download digital copies of six high
priority notices. ese notices cover 23% of the notice volume sent by the IRS, totaling more than
26 million notices, and taxpayers can view through Online Account any of these notices issued since
November 15, 2020. In January we plan to display a taxpayer’s Economic Impact Payment amount
in Online Account, providing a digital way to look this up when filing 2020 tax returns for taxpayers
who have misplaced or have not received the related notices and need to claim additional amounts.
In accordance with the Taxpayer First Act (TFA), the IRS recently developed a 10-year strategy for
improving the taxpayer experience. is strategy will help drive prioritization and decision making
going forward. e TFA Taxpayer Experience Strategy includes plans to further expand on existing
Online Account features and add new ones. However, any future expansion or acceleration would be
dependent on receipt of funding.
In Fiscal Year (FY) 2021, the IRS plans to add additional notices, show the taxpayer’s address on file,
enable taxpayers to sign tax professional authorizations, and offer the option to create a short-term
payment plan in Online Account. In partnership with the Bureau of the Fiscal Service, the IRS plans
to enable taxpayers in FY 2022 to make payments through Online Account, allowing taxpayers to
view their balance and pay it in a single session online without having to reenter information, better
enabling voluntary compliance and improving the user experience. In FYs 2022-2024, the IRS plans
to add the option to update contact information, allow opt-in and -out of paper notices, allow access
to secure messaging in Online Account, and add additional features for tax professionals.
We appreciate the National Taxpayer Advocate’s support for additional and consistent funding for
digital modernization and the National Taxpayer Advocate’s recognition of the positive steps the IRS
has taken to expand online services for taxpayers. e IRS is committed to high-quality, seamless
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experience — through expanded digital service options as well as through improved traditional
channels — in order to help resolve diverse taxpayer needs and promote voluntary tax compliance.
TAXPAYER ADVOCATE SERVICE COMMENTS
TAS appreciates that the IRS is forward-thinking in regard to providing taxpayers comprehensive
access to their online records through the Online Account and other applications. As discussed in
the Most Serious Problem and the IRS response, there are many future features the IRS is planning
that will greatly benefit taxpayers. Providing business taxpayers with the same access to online records
as individual taxpayers will be critical to ensuring all taxpayers can easily access the information they
need to comply with their tax obligations.
roughout the Most Serious Problem, we illustrate problems with relying on a piecemeal system
of online applications, where taxpayers must use one application to find some information and
then another application to find additional information or take an action. e IRS has made some
progress in integrating applications. e IRS’s future plans to allow taxpayers to view a balance
and pay it in a single session will encourage taxpayer compliance and reduce taxpayer frustration.
Another step forward is the plan to make information regarding Economic Impact Payments available
in the Online Account starting in early 2021. However, the IRS has not committed to integrating
all its taxpayer-facing online applications into the Online Account. is step is key to making access
to online records simpler for taxpayers. Although the IRS states that it is prioritizing features that do
not otherwise exist online, it should also make adjustments to existing features so they are easier to
use and integrated in one place.
e Most Serious Problem discusses the downfalls of relying primarily on transcripts to inform
taxpayers about their accounts. As explained, the transcript can be confusing to taxpayers, who
cannot easily ascertain from the transcript when a return was filed or when a refund was issued.
Additionally, the transcript lacks key information shown on a taxpayer’s return, such as the
dependents claimed for certain tax benefits. e IRS has not committed to posting actual copies
of returns within the Online Account, and we hope this is something it will reconsider in the near
future.
TAS is pleased to learn the IRS has already begun posting notices in the Online Account, starting
with the six notices that were part of a November 2020 update. e IRS indicates that the notices
chosen represent a significant portion of all notices the IRS sends. While it is positive that the IRS
is focusing on posting high-volume taxpayer notices in the Online Account, TAS believes the IRS
should not only consider volume but also the impact on taxpayer rights when it chooses which
notices to include next. Many of the notices included or planned are primarily informational notices.
Missing from the list of notices currently available or planned for FY 2021 are some key taxpayer
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notices such as the statutory notice of deficiency, which provides a taxpayer’s only opportunity to
challenge a liability in court prior to paying it; the CDP notice, which offers the taxpayer a deadline
to request a hearing before the IRS Independent Office of Appeals; and the refund disallowance
notice, which sets a two-year deadline to challenge a refund disallowance. TAS encourages the IRS to
develop a prioritization plan for posting notices that considers the impact on taxpayer rights as well as
volume.
e IRS must accelerate its timeframe for posting additional notices in the Online Account.
e 31.2 million notices created during mid-2020 that could not be mailed on time due to the
COVID-19 pandemic demonstrate how it is crucial for taxpayers to have access to their notices
online. As taxpayers are grappling to understand the impact of the late-mailed or purged notices
and what it means for their account balances and due dates, the IRS can leverage the Online
Account to provide information. For example, even if a taxpayer lost a copy of his or her refund
disallowance notice, and this notice is not yet included in the Online Account, the IRS could use
personalized messaging to provide an alert to the taxpayer regarding when his or her deadlines expire
for administratively appealing the disallowance or challenging it in court. e Most Serious Problem
gives examples of other personalized status updates.
Overall, the IRS has made great strides toward providing more taxpayer information online. TAS
understands that funding will continue to dictate when and what improvements the IRS can make to
online services. Notwithstanding this restriction, TAS believes the following recommendations will
help the IRS prioritize changes that will make it simpler for taxpayers to access their tax information
online and will promote taxpayer rights.
RECOMMENDATIONS
Administrative Recommendations to the IRS
e National Taxpayer Advocate recommends that the IRS:
1. Provide business taxpayers access to an online account similar to the IRS’s Online Account
that is available to individual taxpayers.
2. Prioritize posting to the Online Account notices that provide the taxpayer with key statutory
or administrative rights, a deadline for action, or notice of a potential intrusive enforcement
action, such as levy.
3. Develop a timeline for when all remaining notices used by the IRS, outside the 11 notices
already scheduled, will be available to be viewed within taxpayers’ Online Accounts.
4. Provide access to all self-assistance online applications through the Online Account.
5. Update and consolidate Online Account information to reflect information from all other IRS
online applications.
6. Integrate secure messaging so that taxpayers can initiate and view messages and upload and
download documents to and from the IRS within their Online Accounts.
7. Place taxpayer-specific alert banners on the main dashboard of taxpayers’ Online Accounts to
provide information regarding their status of their cases and highlight important deadlines,
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such as the due date for providing documentation in an examination, the assignment of a
balance due case to a Revenue Officer, or the deadline to request a CDP hearing.
8. Allow taxpayers to add, change, or remove authorized representatives through the Online
Account.
9. Allow taxpayers to give authorized representatives access to Online Account records for the
authorized tax years.
10. Allow taxpayers to update their address and other contact information through the Online
Account.
11. Allow taxpayers to make certain requests and file certain forms through the Online Account,
such as a CDP request, a penalty abatement request, or a tentative carryback application for
refund where e-file is not otherwise available.
Legislative Recommendations to Congress
e National Taxpayer Advocate recommends that Congress:
1. Continue to fund the technological upgrades the IRS requires to provide an enhanced level of
service that the country deserves to improve its overall operations.
2. Provide sufficient funding for the Business Systems Modernization account to enable the IRS
to replace its 1960s technology systems, create an integrated case management system, and
offer robust online accounts for taxpayers and practitioners.
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