IRS taxpayer service outlook, short- and long-term, is bleak

Continuing cuts to the Internal Revenue Service budget could have deleterious long-term effects on the agency's knowledge transfer, according to one IRS official.

In order to preserve as much of its reduced budget as possible, the IRS has opted in recent years to halt hiring of new employees. While that hiring freeze helps the agency cope with an immediate fiscal crisis, it could contribute to a brain drain at the IRS.

As the IRS workforce ages, many of those older IRS workers could retire before transferring their institutional knowledge to new, younger employees.

Peggy Sherry, IRS deputy commissioner for operations support, expressed her concern about the possible loss of experienced IRS employee brainpower and knowledge during a panel discussion at the American Institute of CPAs Fall Tax Division Meeting on Nov. 5.

The lack of younger employees is of particular concern, Sherry told the CPA group and reported by Bloomberg BNA Daily Tax Report, since 21 percent of the 90,000-person workforce is currently eligible to retire. In four years, that retirement-ready number increases to 35 percent.

"What we don't want is for that 35 percent of the people to leave us in four years and to not have left behind their knowledge," Sherry said. "There are about 2,000 people in the entire IRS who are under the age of 30. That's stunning, that's not a recipe for sustainment by any means."

Trouble for 2015 tax season? While Sherry is looking down a longer IRS road, a couple of other IRS execs offered gloomy predictions for the coming 2015 filing season.

"The continuing uncertainty about the extender legislation imposes stress not only on the IRS but the entire tax community, including everyone in this room," IRS Commissioner John Koskinen told the CPAs gathered in the nation's capital.

The House has approved several expired provisions as separate pieces of legislation. The Senate Finance Committee has approved most of the extenders en masse as the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act, but was unable this spring to get full Senate approval of the bill.

Now they've to work extenders consideration around the upcoming holidays and come up with one piece of legislation that satisfies a majority of Representatives, Senators and the president.

The commish reiterated to the CPA meeting the warnings he detailed earlier in a letter to members of the House and Senate tax-writing committees. Without lame duck action, be it re-instituting the 55 tax laws that expired Dec. 31, 2013, or officially accepting their end, we face yet another delayed start of a tax-filing season.

And, as I noted last week at my other tax blog, that means delayed refunds for millions of Americans.

National Taxpayer Advocate Nina Olson also is worried about a bumpy 2015 filing season. Her main concern, however, is the problem that budget cuts have caused in the customer service area.

Both individual filers calling the IRS for help filling out their forms, as well as tax professionals looking for guidance on their clients' returns could see even longer wait times, warned Olson.

Also last week over at Bankrate, I looked at 2015 tax brackets and other inflation changes.

I typically post my additional tax thoughts at Bankrate Taxes Blog on Tuesdays and Thursdays. If you miss them there, you usually can find highlights and links here the following weekend.

You also might find these items of interest:

• IRS' fiscal year 2014 budget takes a big hit
• IRS chief thanks tax community for smooth 2014 filing season
• Could privatized call centers be in the IRS' correspondence audit future?