After absorbing a $346 million budget cut, IRS officials are
warning taxpayers not to expect their phone calls to get answered or their
refunds to be delivered quickly. Employees shouldn’t count on overtime pay, or
for empty staff slots to be filled. And lawmakers seeking to reduce the deficit
should assume the agency will collect far less revenue than it could have.
In all, the IRS is operating with roughly $1.2 billion less than it did
in 2010, when the agency’s budget reached its high-water mark of roughly $12.1
The $10.9 billion the agency is slated to receive for 2015
is a 3 percent cut from last year and the IRS’s smallest budget since 2007.
Adjusting for inflation, the IRS budget is roughly equivalent to what Congress
gave it in 1998 — an era when the agency processed about 30 million fewer
returns in a given year.
The recent budget cuts have led to far fewer employees at
the agency, according to the National Treasury Employee Union, which represents
IRS employees. The IRS had just over 83,000 staffers at the end of 2013, around
10,000 fewer than when the budget cuts started and around a quarter less than
two decades ago.
The IRS chief, John Koskinen, added that, with few
exceptions, the agency would only be able to add about one new staffer for
every five that exit. The agency’s travel budget will also get slashed, and
overtime pay will be for emergencies only — such as if information technology
systems break down during the filing season.
As a last resort, the commissioner said Thursday, the agency
could even hand down unpaid furloughs for staff — essentially shuttering the
entire revenue agency for a day at a time. For taxpayers, Koskinen is
already cautioning that the chances of the IRS answering their phone call is no
better than a coin flip. The IRS had been answering the phone at about a 60
percent rate. Even if a taxpayer and tax practitioner does get through, they
should expect a long wait beforehand, the IRS chief stressed.
The problems taxpayers could face go far beyond the phone.
IRS drop-in centers handled about 114,000 questions during the 2014 tax-filing
season, according to the Government Accountability Office, down from almost
200,000 the previous year.
The nation’s taxpayer advocate, an in-house watchdog, said
in a report in January that the IRS had helped prepare close to a half million
returns a decade ago for lower-income families, people with disabilities, and
older taxpayers. The IRS now says it won’t be able to prepare any returns for
those taxpayers. And if a taxpayer does happen to get through on the phone,
they’ll only get help on “basic” tax questions during the filing season.
Outside of that window, even those taxpayers who filed for extensions won’t get
those questions answered.
The problem for Koskinen and the IRS is that the
budget-cutting zeal for the agency is unlikely to subside on Capitol Hill —
particularly if, as expected, the agency’s performance falls off in the coming
year. Congressional Republicans remain livid at the IRS for its improper
scrutiny of Tea Party groups, and have said they’re not buying the agency’s
line that it needs more money and that cuts to the IRS are counterproductive.
A string of top GOP lawmakers trumpeted cutting the agency’s
budget as one of their favorite aspects of the recent government funding deal.
The Obama administration is expected to unveil new rules for the tax-exempt
groups at the center of the Tea Party controversy next year, which will likely
further anger Republicans. But on top of that, as Koskinen pointed out this
week, Congress started rolling back the IRS’s finances well before news broke
about the agency’s singling out of conservative groups.
Republicans also don’t agree with the commissioner’s take
that he can’t wring any more efficiencies out of the IRS’s budget, having
blasted the agency’s past spending on conferences and Koskinen’s decision to
award employee bonuses.
Koskinen has said that he’s trying to make a long-term
argument to lawmakers to increase the IRS’s funding, talking up the agency’s
outdated technology systems and laying out how those improvements will
streamline matters for taxpayers. As he pushes for more funding, the IRS chief
is also warning that the budget cuts will lead to the agency collecting $2
billion less in revenue — with the main beneficiary being tax cheats.
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