Here’s How IRS Budget Cuts Could Affect You

Ravaged by an inflation-adjusted budget cut of 17 percent since 2010, the IRS is not what it used to be. Its workforce is reduced, employee training is scaled back, and necessary upgrades to critical information technology systems have been delayed. While most people are not quick to sympathize with the IRS, the reality is that we need it to function properly.

Should we care that the IRS is in trouble?

All of the limitations add up to one clear conclusion: the IRS’s ability to efficiently provide taxpayers with the services they require and to enforce America’s tax laws is severely hampered. The Treasury Inspector General for Tax Administration, the Government Accountability Office, the National Taxpayer Advocate, and the IRS Oversight Board have already weighed in on the issue, and all agree that the situation is dire.

A group of former IRS commissioners, including officials from both Democratic and Republican administrations, recently released a collective statement warning that, over the past five decades, none of them had ever witnessed such reductions in IRS budgeting and capabilities. They wanted to call attention to the impact that budget cuts from the last five years are having on the U.S. tax system and on common taxpayers ability to navigate complicated IRS tax code.

Example of Failed IRS Services

Nina Olson, a National Taxpayer Advocate, recently wrote about an example of the IRS’ failure to provide essential services to the public. According to the TPP (Taxpayer Protection Program), returns flagged as potential identity theft cases trigger an extra layer of security. The taxpayer claiming the return must contact the IRS online or by phone to finish processing.

In the vast majority of cases, there is no identity theft, and an honest American is left trying to get a hold of the IRS in order to receive the return they are due. According to Olson, for three weeks during the peak of the 2015 tax season, TPP case service was worse than 10 percent. More than 90 percent of calls and online messages were simply going unanswered.

Congressional Response Isn’t Enough

After criticism started to mount in 2015, Congress decided to provide the IRS with a small financial boost for 2016. Unfortunately, that funding influx was only enough to keep pace with inflation.

John Koskinen, the current IRS commissioner, testified that the modest budget increase was not sufficient to turn around the crushing financial constraints under which the agency is currently operating. Koskinen told Congress he believed the number of permanent, full-time IRS employees will continue to drop in 2016. At the same time, growing demands from cybersecurity and anti-identity theft measures continue to pile larger and larger workloads on the agency.

The situation is leading many tax experts to wonder just how much taxpayers can rely on the IRS for essential services in 2016 and beyond.

Cohen & Burnett: Your Tax Advocate

If one thing can be learned from these developments, it’s that taxpayers can’t rely on the IRS to solve their tax concerns. They simply don’t have the resources. If you want a proven advocate on your side throughout the process, you can turn to Cohen & Burnett. We’ve proudly served the Washington D.C. area for more than 25 years.

To learn more about our estate planning and tax services, please visit our homepage today.

sort

SUBSCRIBE /

Receive the latest trends, news and resources on estate planning and asset management directly to your inbox.