John Sheeley couldn’t believe what he was hearing. He was listening to brand new IRS Commissioner Charles Rettig deliver a keynote address at a tax conference in the summer of 2019. Commissioner Rettig told the group of tax professionals that, in addition to the obvious staff shortages and budget cuts, another reason calls to the IRS were going unanswered was the Federal Emergency Management Association (FEMA). According to Commissioner Rettig IRS phone representatives are cross-trained to answer phones for FEMA in the event of a natural disaster. Indeed entire IRS call centers can be reallocated from the IRS to FEMA when necessary. While that’s good news for those needing to reach FEMA during or immediately after a natural disaster it’s terrible news for an already chronically beleaguered IRS, taxpayers, and tax practitioners.
Sheeley, a Chester, New York, based Enrolled Agent owns Tax Practice Pro, a company that provides continuing education for tax practitioners. Because many of his courses are designed to train Enrolled Agents and other tax practitioners to represent taxpayers before the IRS, the news about the effect of natural disasters on IRS call centers was concerning. Being a numbers guy he began wondering if data existed that described the extent to which FEMA used IRS resources during various disasters. On January 24, 2020 Sheeley submitted a Freedom of Information Act (FOIA) request to the Department of Homeland Security (DHS) that requested the following information:
- The approximate number of employees assigned as “telephone assistors” at IRS call centers (those who answer calls from the public as well as those who answer calls to the “practitioner priority line”).
- The periods during specific years that IRS call centers were reallocated to answer FEMA calls.
- The approximate number of IRS call center employees reallocated to FEMA for each reallocation period.
Sheeley received his response on June 11, 2021 (a year and a half later for readers who don’t want to do the math). The results of the request showed that not much information was available from 1998 through 2008. In 1998 and 2001 no information was available at all other than the fact that the IRS was activated and why (various hurricanes). Information for 1999 and 2000 was not included in the results. From 2002 through 2009 (exclusive of 2006 which also was not included in the results) the only information provided was the cost of “IRS historical activations” and the reason for the activations (hurricanes and wildfires). Information on the cost, the number of days IRS call centers were activated for FEMA, the cost per call, the number of agents reallocated, the number of calls handled, and the reason for the activations were provided for the period from 2011 through 2021 (excluding 2013-2015 and 2019). The report did not indicate why missing years were not included. Possibly, although it seems unlikely, the call centers weren’t reallocated in the missing years.
The highest number of agents reallocated was 2,500 in 2012 in response to Superstorm Sandy and Hurricane Isaac. Telephone assistors responded to over 336,000 calls during a 16-day activation period at a cost per call of $30.63 (total cost $10.3 million). The longest period that IRS assistors were reallocated was 125 days in 2017 in response to Hurricanes Harvey, Irma, and Maria. For the covered period 2,400 agents were reallocated and over 773,000 calls were answered at a cost per call of $57.94 (total cost $81 million). What’s different about these earlier periods, however, is that other than the Affordable Care Act (Obamacare), which took effect beginning in 2010, not much was happening with respect to tax legislation. Sure, there were the usual packages of last minute (or occasionally retroactive) “extenders” such as renewable energy credits or the mortgage insurance deduction but, in general, changes to tax law were incremental or at least had a long lead time (e.g., Obamacare). So while IRS phone centers were busy they weren’t necessarily abnormally busy.
Beginning with the passage of the Tax Cuts & Jobs Act (TCJA) in December of 2017, however, new tax law with immediate (and sometimes even retroactive) consequences has been being passed almost continuously. To say that Covid-19 accelerated this trend is an understatement of epic proportions. Since the passage of the CARES Act in March of 2020 and continuing to the present the IRS, taxpayers, and tax practitioners have been bombarded with changes. Covid-related shutdowns also resulted in a huge and well-documented mail backlog that is only just now beginning to be cleared (i.e., both opened and processed). The mail processing backlog caused millions of notices to be issued. Some of these notices were erroneous. Some addressed issues that had a response from the taxpayer or their representative sitting in a pile of unprocessed mail. Many (if not most) necessitated additional calls to IRS phone centers already jammed with calls concerning new tax law, economic impact payments, and countless other issues. In other words, demand on IRS call center resources increased by an order of magnitude (maybe more) at the same time as a global pandemic and a host of natural disasters was putting demands on FEMA and its call centers.
According to the National Interagency Fire Center’s website over 22,000 wildfires burned over one million acres in 2020. Despite the numbers, which included California having its worst wildfire season on record, the results of the FOIA request indicated that in 2020 IRS call centers were activated for FEMA use for 54 days and the only cause listed was Hurricane Laura. No wildfire related activations. No pandemic related activations. One thousand assistors handled over 278,000 calls.
Data for 2021 shows 25 days of activations to date which have used 200 representatives to handle almost 68,000 calls for Covid-related issues and the winter storms that affected Texas and other southern states. Of course the 2021 wildfire and hurricane seasons are just getting going. While it looks like the effects of the pandemic are on the wane (at least here in the U.S.) proposed legislation in American Families Plan includes more retroactive tax law changes and, of course, the effects of the advance payments of the Child Tax Credit (CTC) on 2021 tax returns remain to be seen. Tax practitioners are already dreading having to reconcile the advance CTC payments and the third round of economic impact payments on taxpayers’ returns next year and many are expecting do-it-yourself taxpayers to get blindsided by the need to repay the advance CTC payments. In other words, not many in the tax industry are expecting lower IRS call center demand from now through next filing season. Combine high IRS call center demand with another potentially epic wildfire and hurricane season and the likely outcome is yet another abysmal year of customer service related data for the IRS.
One of the lessons from the Covid-19 pandemic was that while it is never cost effective to have resources simply sitting on hold in the event of an emergency it is prudent to do so. While permanently increasing FEMA’s number of telephone assistors to the number required during a severe and/or prolonged disaster may not be possible or even desirable, given the increasing pace and severity of meteorological events such as wildfires, hurricanes, polar vortex episodes, etc. it may be prudent to provide some level of permanent increase to the agency’s current number of telephone assistors. Additionally, if Congress continues to pass new tax legislation with immediate and/or retroactive effects they should probably also consider the effects on IRS phone centers and maybe, just maybe, consider cross training some other agency’s phone team (the Social Security Administration possibly?) to handle FEMA-related overload. Of course, it’s just a suggestion.