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TaxWatch: IRS unveils new chatbots to help taxpayers as agency churns through backlog of 10.5 million tax returns


People who owe income taxes have a new way to set a payment plan: a chat with a bot powered by artificial intelligence technology, instead of a phone call with an Internal Revenue Service employee after a lengthy wait on hold.

The IRS hopes the new offering will help de-clog phone lines and help more callers at a time when it’s reassigned staffers from all over the agency — including people who usually answer the phone — to clear a backlog of tax returns in need of processing.

“These bots are going to help answer many of the calls that otherwise would not have been answered,” said Darren Guillot, IRS deputy commissioner of small business/self employed collection and operations support.

The bots started work on Tuesday, and since then, there was one day where they answered 13,000 calls, Guillot noted on Friday.

The IRS has already been expanding services to give puzzled taxpayers automated answers instead of making them wait to hear from a human. During the winter, the IRS unveiled bots that could guide taxpayers on how to make one-time payments and offer clarifications on collection notices. These automated assisters have answered more than 3 million calls, Guillot said.

The latest bot program has the technological capacity to match a person to a particular account and let the caller name the price they want to pay as they reduce their tax liability in monthly installments.

Taxpayers have the option of interacting with the bots — either in English and Spanish — or waiting to speak with a human being. (Taxpayers can also apply for payment plans online.)

Tax season ended April 18, marking the deadline to submit a 2021 return or file an extension to submit the return by Oct. 17. April 18 was also when taxpayers had to pay any owed tax before incurring any penalties and interest. Anyone who can’t afford to pay the full tax bill can set up an installment plan, and that’s where the fleet of bots may be of service. The bot program will let users arrange installment plans for tax liabilities up to $25,000. That covers the majority of owed amounts when the IRS sets a payment plan, Guillot said.

The bot rollout comes as the IRS races to clear backlog of unprocessed tax returns. At the start of June, the agency said it had 10.5 million unprocessed individual returns. This includes 8.5 million paper returns waiting for review and 2 million returns where errors need to be fixed.

The backlog should be cleared by the end of the year, IRS Commissioner Charles Rettig has previously said. The IRS has been hiring new staff and reassigning “surge teams” of existing staff to address a backlog of returns and correspondence that stems back to temporary IRS office closures during the pandemic’s early stages and mounds of extra work, like distributing three rounds of stimulus checks, that the agency took on in 2020 and 2021.

When it comes to fielding telephone calls, the IRS needs all the help it can get.
Through early March, taxpayers made roughly 35.9 million attempts to call toll-free customer service lines, according to May findings from the Treasury Inspector General for Tax Administration.

Later this year, the IRS wants the AI-powered voice bots to do even more. Those services will include relaying account and return transcripts, payment history and current balance owed, the IRS said.

“We continue to look for ways to better assist taxpayers, and that includes helping people avoid waiting on hold or having to make a second phone call to get what they need,” Rettig said in a Friday statement. “The expanded voice bots are another example of how technology can help the IRS provide better service to taxpayers.”

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