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Washington, D.C.—Thanks in large part to the efforts of its frontline employees—including their significant work in helping implement the economic stimulus package—the Internal Revenue Service (IRS) had in many respects “an extremely successful year” in 2009, National Taxpayer Advocate Nina Olson told Congress in her annual report on IRS issues and operations.

The IRS “has, through talent, determination and dedication, pulled off what could have been a disastrous filing season, what with significant tax law changes enacted in the middle of the filing season,” Olson wrote in a message accompanying her report. Olson heads the Taxpayer Advocate Service (TAS), an independent body within the IRS.

“IRS employees delivered not only another successful filing season, they played crucial roles in implementing the vital stimulus package, and worked diligently to expand service to taxpayers and most particularly to economically distressed taxpayers. Their work during 2009 was exemplary,” said President Colleen M. Kelley of the National Treasury Employees Union (NTEU), which represents the IRS workforce.

The NTEU leader noted in particular the work of IRS employees in handling new or expanded programs during 2009, including effective and prompt processing of claims and amended returns in connection with the First-Time Homebuyer Credit; handling revised withholding tables for the Make Work Pay credit; its work with the Cash for Clunkers auto sales program; its efforts on the new disclosure program impacting taxpayers with offshore accounts; and more. Unfortunately, resources and personnel were diverted from customer service responsibilities to help handle this new workload.

President Kelley also pointed out that this work was conducted amid a significant volume of tax return processing; through fiscal 2009, which ended on Sept. 30, more than 236 million tax returns had been filed. More than 144 million of those returns came in during the tax-filing season alone. In all, during the fiscal year, some $2.345 trillion in revenue was collected and $438 billion in refunds issued.

Under federal law, Olson is charged with making periodic reports to Congress, including her office’s annual report identifying at least 20 of the most serious problems encountered by taxpayers, and making various recommendations to address these issues.

While the report does identify certain issues impacting taxpayer customer service—an essential companion to enforcement actions in helping ensure taxpayer compliance with their tax obligations—President Kelley noted with approval provisions of the fiscal 2010 omnibus appropriations measure designed to enhance the IRS’s ability to provide quality customer service. NTEU has long been lobbying for additional IRS staffing.

Under the omnibus, the IRS will receive $12.1 billion this year, an increase of $600 million over the previous fiscal year, and an appropriation matching the president’s request for fiscal 2010. Some $7.7 billion of that funding will be directed toward the two pillars of compliance—enforcement and customer service. Enforcement efforts will receive $5.5 billion in funding, customer service $2.2 billion.

“I welcome this level of funding for the agency’s customer service efforts. It is in line with NTEU’s recommendations for additional resources and needed enhancements in this critical aspect of IRS operations,” President Kelley said.

NTEU is the largest independent federal union, representing 150,000 employees in 31 agencies and departments.