Preliminary information from the 2015 filing season shows a mixed bag of success and failures for the IRS. The IRS successfully processed returns and issued refunds, taking into account new requirements under the Affordable Care Act. At the same time, taxpayers experienced significant difficulties in contacting the IRS and tax-related identity theft increased compared to last year.
Returns and refunds
So far this year, the IRS has processed 126 million individual tax returns, compared with 125.6 million last year. The IRS has issued 91.8 million refunds, compared with 94.8 million last year. According to the IRS, the average refund is $2,711, up from $2,686 last year. The IRS also reported that visits to its website jumped 12 percent this year compared to 2014.
Affordable Care Act
Effective January 1, 2014, individuals must carry minimum essential health coverage or make a shared responsibility payment, unless exempt. At the start of the filing season, the IRS launched a campaign to educate taxpayers about the individual shared responsibility requirement. At that time, the IRS estimated that at least two-thirds of filers would report having minimum essential health coverage, such as employer-provided coverage. Many other taxpayers would be exempt; and others would be required to make a shared responsibility payment.
Looking at the preliminary data, the IRS reported that 76 percent of filers checked a box on their returns to report they had minimum essential coverage in 2014. Approximately 12 million taxpayers claimed an exemption from the individual mandate. Some 7.5 million taxpayers made a shared responsibility payment. However, according to the IRS, some 300,000 individuals overpaid their shared responsibility payment.
The IRS also processed some 2.6 million claims for the Code Sec. 36B premium assistance tax credit. The credit helps offset the cost of health insurance through the ACA Marketplace. The average Code Sec. 36B credit amount was $3,000.
The IRS cautioned taxpayers that budget cuts would negatively impact customer service during the filing season and the filing season reflected its prediction. In 2014, the IRS answered 71 percent of all calls from taxpayers. This year, the percentage fell to 37 percent and wait times increased. The IRS also expanded its use of so-called courtesy holds (which automatically disconnect a caller after a certain amount of time). The IRS made 8.8 million courtesy disconnects during the 2015 filing season.
Note. National Taxpayer Advocate Nina Olson recently told Congress that the decline in customer service has consequences beyond long wait times. “For a tax system that relies on voluntary self-assessment by its taxpayers, none of this bodes well,” Olson said. “In fact, there is a real risk that the inability of taxpayers to obtain assistance from the government, and their consequent frustration, will lead to less voluntary compliance and more enforced compliance.”
Tax-related identity theft continues to grow as criminals find new ways to scam unsuspecting taxpayers. In 2014, the IRS reported discovering some 700,000 fraudulent returns. So far this year, the IRS has identified some 1.5 million fraudulent returns. The IRS also received approximately 1.6 million calls to its Identity Protection Specialized Unit (IPSU).
The IRS also has had to deal with fallout from the May 2015 breach of its Get Transcript app. Criminals were able to access more than 100,000 taxpayer accounts, including names, Social Security numbers and dates of birth of dependents.
If you have any questions about the 2015 filing season, please contact our office. All of these statistics are preliminary and could change as the IRS continues to process data. The IRS typically publishes tax return statistics about 15- to 18 months after the close of the tax year in order to provide time for all returns to be filed.