IRShenanigans

Speaking from personal experience, I can tell you that calling the IRS is an absolute nightmare.  When I was involved with the corporate filing industry, one of my biggest frustrations was getting the IRS to issue an Employer Identification Number (EIN).  To their credit, the IRS does have an online tool to obtain EINs.  However, it only worked correctly for individuals with a Social Security Number starting their first company.  The online tool was supposed to be able to generate an EIN for new companies that were being started by existing companies (i.e., a new LLC owned by an existing corporation).  Unfortunately, that part of the tool never worked.  Non-citizens starting new US companies (a sizable chunk of my client base) also couldn’t get the tool to work.  To get around that, you used to be able to: 1) call the IRS, 2) give the operator the info needed to get the EIN, and 3) receive the EIN immediately over the phone with a confirmation letter being sent by fax and mail.

About 4-5 years ago (if I remember correctly), Congress and the IRS got in a big budget fight .  The IRS response to the budget cuts was to drastically slash staff and training for customer service (see the Ways and Means Committee blog from this past April).  At the start of the budget kerfuffle, one of the first things that the IRS did was to stop accepting calls to get a new EIN.  Instead, your choices were to fax in or mail the EIN obtainment form (Form SS-4).  Mailing the form in gave you a minimum 4-6 week wait time for any response, so that wasn’t an option.  The only workable solution was to fax in the form and wait for a faxed reply.  In theory, this dropped the wait time from 4-6 weeks by mail to 3-4 business days.  Anyone who’s dealt with government at any level knows about the huge gulf between theory and reality.  The real world result was you’d fax in the form and then frequently get no response or a rejection by fax for an incorrect reason.  You’d then have to call the IRS, wait for anywhere from a half hour to multiple hours for someone to answer the phone, and try to get the operator to fix the problem.  As you can imagine, folks starting new businesses weren’t very happy about that.  Having to wait 1-2 weeks to even start the process of opening a bank account so a comapny could start conducting business is a huge bundle of frustration..

I’ve been out of the industry for close to 2 years, but looking at the IRS site nothing seems to have changed.  It looks like only 38% of calls to the IRS were answered in 2015.  Democratic politicians will tell you that Republican budget cuts are the reason for the problem.  Republican politicians will tell you that the problems are caused by bad internal  management at the IRS.  As usual, the truth probably lies somewhere in between.  Either way, the end result is that people starting small businesses end up with a kick to the balls because of political infighting.

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