IRS system mostly broken for tax payers seeking information

WASHINGTON – If you want to set up an online account with the IRS, good luck. Prepare to swear.

Even if you manage to authenticate your information and set up an account, the platform is so glitchy that you might end up getting locked out.

Then the taxing agency will have to send you an activation code through the U.S. Postal Service – making you wait up to 10 days to get your account unlocked – although the IRS already has your email address and cellphone number and could simply email or text message you to verify your identity, much like a bank or brokerage.

I’m calling this column “Hot Mess Part 2,” because many taxpayers just can’t take it anymore.

I recently wrote about the abysmal record of the IRS at picking up the telephone when taxpayers call. So now let’s talk about the agency’s antiquated online account system for taxpayers.

My husband and I have been trying to fix some errors the IRS made while reviewing our 2018 joint return.

As part of our response to the agency, we wanted to double-check some information by accessing our online accounts.

I could get into mine. My husband could not. The portal said it couldn’t verify his identity. This has happened before.

“The information you entered does not match our records,” a red-colored notice on the site said. “Please verify your information and try again.”

Ugh!

So, we had to request an activation code be mailed – again. Turns out it didn’t matter because neither his account nor mine had the information we needed.

What’s so maddening about the failures of the individual online account portal is that the IRS can’t handle the volume of phone calls from the pandemic-related surge in taxpayer issues.

But if the agency had a better online platform, many people might resolve tax problems on their own, if they could just get to the information the IRS has on them, said Erin Collins, the national taxpayer advocate.

Because of outdated technology, the IRS operates a largely paper-based system, requiring taxpayers to keep copies of paper correspondence or use a patchwork of electronic applications to gather necessary information, Collins complained in her 2020 report to Congress.

“Due to years of limited funds, the IRS has only been able to add some online services in a piecemeal fashion,” Collins said. “Taxpayers deserve better service from the IRS.”

Here’s a statistic from Collins’ midyear report to Congress, released last week, that won’t come as a surprise to many people who have tried and failed to set up an individual online account.

Most taxpayers who try to establish accounts fail because they cannot pass the e-authentication requirements.

The authentication rate for IRS online applications was 42% in fiscal 2020, according to Collins’ report.

In other words, fewer than half of the taxpayers who tried to set up online IRS accounts were able to convince the agency of their identities.

Clearly more people want to help themselves. The IRS had 9.5 million unique users access its individual online account platform in fiscal 2021 through May, more than double the previous period.

“Taxpayers’ inability to establish and use online accounts renders the accounts meaningless,” Collins said.

Then there is the functionality of the accounts, which is exasperatingly limited. You may find you can’t view notices the IRS has sent.

There is no place where taxpayers can view all their consolidated information.

You can’t see an actual copy of the tax return you filed. The only way for the taxpayer to view a copy of what they filed is to mail a request to the IRS, pay a $43 fee, and wait up to 75 days, Collins points out.

Given the backlog of processed returns, that time frame is optimistic.

“Effective self-service tools with specific account details will help save scarce IRS resources,” Collins wrote. “However, to be effective, the IRS needs to offer online services that taxpayers find to be beneficial and easy to use.”

Understandably, the agency should be protecting taxpayer information. A robust authentication system is necessary.

But when more than half of the people trying to set up an account are rejected, that’s a horrendous record.

“For individuals and businesses that have been banking online for two decades or more, the contrast between their online bank accounts and an online IRS account is stark,” Collins said.

At the very least, a better online portal would free up IRS employees to answer their phones, which presumably means they would hear less profanity on the other end of the line.