Remarks by Ken Corbin, IRS Commissioner for Wage & Investment
Remarks at the Fall 2018 CERCA Conference.
Prepared Remarks of Ken Corbin,
Commissioner, Wage & Investment Division
Before the Council for Electronic Revenue Communication Advancement (CERCA)
November 14, 2018
Hello and Thanks
Good morning. I’m Ken Corbin, Commissioner of Wage and Investment. I last spoke with you earlier this year at your spring meeting and it’s a pleasure to be with you again at your fall meeting. I’m here to talk about some of the challenges facing the IRS and what you can expect next filing season. But first, I’d like to start by expressing my appreciation to you for everything you do to help maintain our tax system. The IRS can’t go it alone when it comes to running the tax system. The partnership we have with CERCA helps us succeed in fulfilling our dual mission of tax compliance and taxpayer service, and we deeply appreciate it. Thank you. The partnership we have with you goes both ways. We strive to always maintain an open line of communication with all our partners.
Collaboration
A good example of this is the work required to implement the tax law changes included in the Bipartisan Budget Act (BBA). The BBA was enacted on February 9, 2018 — a few weeks after the start of the 2018 filing season — and several key steps had to be taken to implement the changes required by the new law. Tax forms, instructions, and publications had to be updated and reissued on irs.gov to reflect extension of the provisions. Research had to be conducted to determine if programming changes were needed to address modifications to the law. Required programming changes to the electronic filing system had to be completed for the affected provisions so IRS could process returns related to the BBA. Ongoing coordination with industry partners was needed to determine when they could update their systems and software so the IRS did not prematurely advise taxpayers to file. We couldn’t have done it without the help of our partners in the tax community. You helped us get the word to taxpayers who needed to wait to file their returns and we thank you.
2018 Returns
Despite these challenges, we had a successful filing season. To give you an update, as of September 30, 2018, we received over 148 million individual returns — about 88 percent of them were filed electronically. We have issued over 109 million refunds for a total of almost 307 billion dollars. Almost 89 million refunds were directly deposited into taxpayers’ accounts, which is about 500 thousand more than last year. The average dollar refunded this year is about $2,800.
Toll-free and Face to Face Service
In addition to smooth return processing and continuing to issue more than 9 out of 10 refunds in less than 21 days, we achieved the highest telephone level of service during the filing season since 2007. In addition, our assistors answered more calls than in 2017, and taxpayers had to wait less time for their call to be answered. For the filing season, the level of service on our customer service lines was 80 percent and we ended the fiscal year on September 30 with an overall fiscal year level of service of 75.9 percent.
The IRS has also been successful in providing timely assistance to taxpayers who visit one of our Taxpayer Assistance Centers, or TACs, around the country. As I let you know when I spoke to you I the spring, this was the second year that all TACs are offering appointments in advance to not only to meet taxpayers’ needs more efficiently, but also to maintain the high-quality standards to which our customers have become accustomed. This fiscal year through September 30, about 4.1 million people called for an appointment. About two million of these callers had their issue resolved over the phone, or were referred to other resources for help. Taken together with the number of taxpayers we assisted in our TACs, we served about 4.9 million taxpayers this year. The IRS also prepared over three and a half million returns at our volunteer sites.
All of these efforts – continuing to issue 9 out of 10 refunds within 21 days, answering 8 out of 10 phone calls, making the appointment service more efficient, providing service to taxpayers in the channel they prefer – demonstrate our commitment to putting service first. Our relationship with CERCA that helps get the word out and promotes service through effective communications is another way we demonstrate our commitment to putting service first. Again, thank you.
Identity Theft
Another important role tax professionals play in the tax ecosystem can be seen in the critical support you have provided in the battle against stolen identity refund fraud. As Commissioner Rettig mentioned earlier, we’ve made a lot of progress over the last few years in this area, especially through the Security Summit. Many of our partners in the tax community, including CERCA, were there at the beginning and have been heavily involved ever since. This unique partnership of the IRS, the private sector, and state tax commissioners has been a great success. Working together, we have improved our ability to protect taxpayers and their data, to make the act of filing a tax return as safe and secure as possible. We will continue to work with CERCA and our other Summit partners to refine existing protections and to add new ones.
An example is the improvements we recently made in the Taxpayer Protection Program (TPP). When tax returns are selected by TPP as potential identity theft, the IRS sends the taxpayer a letter requesting additional identity verification and information before processing the return. The taxpayer can either call the TPP phone line, schedule a TAC appointment, or verify online using IDVerify. IDVerifiy Phase I, which launched earlier this year, allowed victims of identity theft who did not file a refund return to resolve their cases online. Taxpayers who filed a refund return must still call the TPP phone number or visit a TAC. IDVerify Phase II, which launched just last month, enables all taxpayers selected by the TPP – ID theft victim or not — to provide additional identity and return verification information online, protected by Secure Access. If the taxpayer successfully verifies the requested information, their return will continue processing, and they will receive their refund in about nine weeks.
From 2015 to 2017, the number of taxpayers reporting to the IRS that they were victims of identity theft dropped by 65 percent, and the number of tax returns with confirmed identity theft fell by 57 percent. However, identity thieves continue to target tax professionals, as well as human resource departments, businesses, and other places with large amounts of sensitive financial information. We view tax professionals as essential partners in the effort to battle identity theft. You can take steps to protect your data and your clients’ data, and encourage your clients to take the same precautions. As Commissioner Rettig mentioned earlier, we will soon launch our annual National Security Awareness week, so be on the lookout for more information to help you and your clients stay protected against identity thieves.
Other examples of the important partnership between IRS and the tax professional community include the EITC Summits held in 2016 and 2017 with participants from the tax industry, state and federal agencies, consumer advocates, research institutes, volunteer site coordinators, Low Income Tax Clinic directors, and other organizations. These summits fostered conversation and feedback from attendees on reducing EITC overclaims, improving EITC participation, and improving EITC administration. Recommendations from the EITC Summit have been used to improve training for IRS staff, and to clarify correspondence to taxpayers to help them better understand the tax law and requirements to qualify for the EITC. The IRS also holds regular Contact Center Forums to discuss issues that affect taxpayers who contact the IRS. These and other interactions we have with our partners give IRS an important avenue to provide vital information to the tax community and receive valuable feedback to help us better serve America’s taxpayers.
Looking to the Future
Now I’d like to turn to some of the challenges we’re seeing for the upcoming 2019 filing season. We know you are all getting ready for the upcoming filing season, and the IRS is getting ready, too. We kicked off our third Get Ready (IRS.gov/GetReady) campaign on October 30. For the last two years we’ve used this campaign to get taxpayer attention when they aren’t normally thinking about taxes – during the holiday season. We want them to think about taxes now because, as you know, some can benefit from taking actions in the fall that will make for a smoother tax return filing experience in 2019. The topics are updated versions of last year’s Get Ready campaign, except for Tax Reform which is the new feature topic.
Tax Reform
Implementing changes from the Tax Cuts and Jobs Act (TCJA) has been a major effort for the IRS since its enactment, and continues to be our number one priority. The IRS’s work touches on many major aspects of the tax system affecting taxpayers as well as businesses of all sizes. The effort involves creating or changing many forms and publications, updating processing systems, training our workforce, and educating the public. The IRS’s top priority in this effort is to ensure taxpayers and tax professionals can navigate and understand these changes.
This leads me to an important point. Tax Reform is new and different. As such we’ve worked very hard alongside you and our other partners and stakeholders all year to ensure we are as ready as we can be. But, I want to remind you that we have a lot of practice implementing “new and different,” and I am confident the IRS is well positioned to give you and taxpayers the quality result they expect when we are given the green light to kick off the filing season.
One of the first major actions we took to get ready – starting in January 2018 – was beginning the process of revising the income-tax withholding tables to take into account changes made by the statute. In early January, we released updated withholding tables for 2018 that reflect the increase in the standard deduction, repeal of personal exemptions, and changes in tax rates and brackets. We followed this in late February, when we released the revised Form W-4 for 2018, which more fully reflects the new law. We also provided an updated Withholding Calculator on IRS.gov. Since that time, we have continued to encourage everyone to perform a “paycheck checkup” during the year to make sure that they are having their employer withhold the right amount of tax for their situation. Employees and workers starting a new job can use the calculator and the 2018 Form W-4 to update their withholding in response to the law or changes in their personal circumstances in 2018. For 2019 – like we do every year – we’ll work with the business and payroll communities to encourage workers to file new W-4 Forms next year.
As Commissioner Rettig mentioned earlier, the new law required that IRS create or revise over 500 forms, instructions, and publications – more than double the number in a typical year due to legislation – and to reprogram about 140 information technology systems, with a special focus on returns processing and compliance systems. And there is also a need for an abundance of legal guidance. Our Office of Chief Counsel is taking the lead with formal guidance, and is hard at work, not only analyzing the provisions of the new tax law to determine what guidance is needed and how quickly it can be issued, but also putting pen to paper to address items that need further interpretation and clarification. The best place to find the latest information is on our website, IRS.gov, on the Tax Reform page. A link can be found in the IRS.gov Newsroom, or you can type IRS.gov/taxreform into the address bar of your internet browser.
Along with developing forms, implementing tax reform also involves ensuring our employees have the necessary tools for their roles in tax reform implementation, through hiring and extensive training to ensure our employees will be ready to help taxpayers understand the changes affecting the upcoming tax season including TCJA. Filing season training is already underway for some employees. We started ramping up training over the summer. This summer, our training plan called for more hours than in past summers. For example, we delivered about 23% more hours for our phone assistors and more than double the number of hours for our TAC assistors this summer as compared to last. As we approach filing season and bring more employees on board, they will receive training specific to their role which will include tax reform content as appropriate. We will continue to deliver more training hours to our employees than we do in a typical year throughout the fall and into January. Overall, we plan to deliver about 4.5 million hours of training in taxpayer service, which is 33% more than last year.
We appreciate your partnership in supporting these efforts now and during the filing season. While we are very focused on implementing tax reform, we are now bringing much of that work under the Filing Season readiness and implementation umbrella by incorporating it with other normal filing season topics.
Collaboration
A critical part of IRS operations involves getting feedback and input from tax professionals, industry associations and groups, advisory groups as well as many other partners. We embrace two-way dialogue as a vital part of our tax administration efforts, and we will continue to rely on getting this valuable feedback. Your feedback helps us prioritize where to focus our efforts – and also helps address questions and issues as implementation continues. To start the dialogue, in early February, we hosted a listening session to help us better understand the tax reform implementation priorities and issues from the perspective of our stakeholders. These roundtable discussions included a broad range of stakeholders. We discussed the provisions in tax reform legislation to understand the concerns, issues, and needs from the stakeholders’ line of sight. The Roundtable discussions were constructive and helpful. During three sessions, roundtable attendees expressed urgency around having communication, guidance, and definitions soon, so they can make reasonable decisions at the earliest point possible. We heard the requests and have been developing ways to share the most imminent information quickly and give the definitions stakeholders need. Attendees also asked about flexibility or extensions during the transition period when there’s a knowledge gap – and for us to look at the provisions holistically to see whether elections, safe harbors, and/or penalty relief could apply. Stakeholders encouraged the IRS to draw from our experience from implementing past legislation. We look forward to continuing the dialogue with our stakeholders and partners as we implement the major provisions of the law.
Revised Form 1040
In addition to changes necessitated by the Tax Cuts and Jobs Act, we plan to streamline the iconic Form 1040 into a shorter, simpler form for the 2019 tax season – about half the size of the current form. Although not directly related to tax reform, this redesign is part of a larger effort to help taxpayers more easily comply with their filing requirement. The new Form 1040 will replace the current Form 1040, Form 1040A, and Form 1040EZ, so all 150 million taxpayers will be able to use the same base form to file their taxes. The new form uses a “building block” approach supplemented with additional schedules as needed. Taxpayers who file on paper will use this new streamlined Form 1040 and supplement it with any needed schedules. Taxpayers who use software, including those who use Free File, will still experience the familiar interview process. And speaking of Free File, I’d like to echo Commissioner Rettig’s appreciation to those of you here today from the Free File Alliance for your work on the agreement we recently announced that makes improvements to Free File program.
Transcripts
We also recently introduced a new format for individual tax transcripts to better protect taxpayer data. As we have made inroads to stopping stolen identity refund fraud, criminals need more taxpayer details to better impersonate their victims. This makes the tax transcript a much sought-after document. Criminals attempt to pose as taxpayers accessing their own account or as tax preparers or third parties requesting client information. The new format masks personally identifiable information, but leaves all needed financial data visible. The new format became the default format for transcripts available through all channels as of September 23. At the same time, we also created new Customer File Number that third parties that order transcripts for non-tax purposes can use as an identifying number instead of the taxpayer’s social security number.
Distribution of transcripts to fax numbers or third-party addresses also poses a threat to taxpayer data and presents a risk that sensitive information will result in fraudulent tax refunds. To continue the progress against tax-related identity theft, we reviewed how we distribute tax transcripts and have proposed changes to that process. As part of the new transcript process, starting in January, we plan to stop faxing or mailing transcripts to third parties. Individual taxpayers will still be able to obtain transcripts immediately online via Get Transcripts Online and tax professionals with proper authorization may obtain transcripts via the e-Services Transcript Delivery System. The IRS Data Retrieval Tool through the Free Application for Federal Student Aid (FAFSA) process will not be affected. We are continuing to gather and analyze feedback on the new process from stakeholders in the tax professional community and will fine tune the process as we move forward. As timeframes and details are finalized, we will keep the tax preparation community aware of any changes.
Conclusion
That wraps up what I wanted to tell you today. I hope you’ve gotten some useful information that will help you in your business and also help your clients comply with the tax law. I also want to take one more opportunity to express my appreciation for everything you do to help maintain our tax system. I look forward to continuing to work with CERCA, to ensure we maintain a strong tax system and one that works for taxpayers as well as the entire tax community. Thank you.