Janet Spragens, director of the American University Federal Tax Clinic, told an IRS oversight board that the modernization is causing those who can least afford it to pay more taxes than they should.
The IRS has spent billions in trying to update its antiquate computer systems, including those containing taxpayer records, that date from as far back as the early 1960s.
As part of the modernization, the IRS eliminated many of its walk-in offices where low income taxpayers could come in and talk to an appeals officer with their documents in hand and answer all the auditor's questions. Instead, the agency implemented call centers and computers that can handle more people at one time.
"Low income taxpayers to a very large extent are not part of the new electronic age which is the centerpiece of modernization," she told the IRS oversight board.
"They do not have computers, fax machines, Palm Pilots, Blackberrys and e-mail addresses. They cannot afford Fed Ex packages, certified mail charges and long distance phone and fax bills. Many do not even have access to regular and stable telephone service since their phone lines are often turned off for lack of payment."
Dropping the face-to-face option won't only affect the poor. People who sometimes speak little English, have little education and might be recent immigrants are asked to mail or fax requested information, seek telephone conferences and deal with endless telephone menus, recorded messages and impersonal names and faces on IRS notices, said Spragens.
For example, she said, a legal African immigrant collected all of his paperwork after an inquiry letter about his earned income tax credit and dependency exemptions for his children, and mailed it all off to the Philadelphia IRS office.
After not hearing anything for several weeks, Spragens said, he made at least 10 telephone calls to the person whose name was on the letter, leaving several messages. The immigrant was then sent a notice of deficiency disallowing the credit and the exemptions, and is now in U.S. Tax Court, she said.
"Many taxpayers would rather give up than fight the system," she said. "The result is that they are paying taxes they do not owe, losing refunds to which they are entitled and incurring penalties that should not be imposed."
The IRS oversight board, created by Congress in 1998, seemed surprised to find someone against the modernization program, which members said had been generally popular.
Steve Nickles, a Wake Forest University professor and member of the oversight board, said it would be hard for the board to argue against modernization, considering it was Congress that mandated those efficiency goals within the IRS.
An IRS spokeswoman declined to comment.
Spragens said she was not against modernization but "there needs to be more interaction with the poor, more face-to-face interaction."
She urged the IRS to decentralize and reinstate face-to-face resolution services for the poor, although she admitted that is unlikely to happen.
Instead, she said the agency could use multiyear audits for the same taxpayer with the same auditor, institute toll-free phone and fax numbers for the poor to provide information to the service, eliminate call centers and publicize the existence of the more than 140 low income taxpayer clinics.
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