Budget Cuts Creating Challenges For IRS

Posted by: Brookside Admin

Every year, the IRS Advisory Council releases their report containing recommendations on issues currently facing the agency. That report ws recently released and contains specific information on how budget cuts are affecting the IRS. The budget has steadily declined over the past few years and more cuts took place this year that severly limit the IRS' ability to provide services to taxpayers and handle enforcement functions. Here are some of the specifics of how these cuts affect the IRS as outlined in the IRSAC's report. 

Accounting for inflation, the IRS' budget is down 17-percent from 2010. After this year's cuts, the current budget is lower than the 2009 fiscal year budget. All of this while the implementation of new programs, like the Affordable Care Act and other laws, require more personnel and attention, but don't come with additions to the budget. 

In order to continue to function, the IRS has responded to budget cuts by implementing hiring freezes, limiting training for existing personnel, and other measures that effectively limit their ability to provide quality service. The effects of these measures is already being felt in a number of ways. Notably, many tax payers reported long hold times, or unresponsiveness when contacting the IRS directly for help preparing their tax returns. 

Not only do these cuts negatively influence what amounts to customer service and the IRS' ability to audit individuals who submit returns with false or incorrect information, which incidentally causes less money to be collected through tax returns, the cuts also limit the IRS' ability to implement new protective measures to prevent tax identity theft. That's been a hot-button issue recently, and while the IRS has introduced new programs to try to prevent identity theft, and more precautions for protecting vital personal information, more could, and probably should, be done. 

Along with the significant decrease in budget since 2010, IRS employment has also declined over the same period from more than 107-thousand employees in 2010 to 91-thousand in 2014. During the 2014 fiscal year, the number of enforcement agents alone decreased nearly 1-thousand. 

The effect of these cuts on the amount of collections has been harder to illustrate, however. Gross collections in 2014 increased for the fourth consecutive year. Enforcement collections also saw an increase, even though 11-percent fewer examinations were conducted in 2014 than in 2013. 

While some individuals believe that these budget cuts will make it less likely that they'll be singled out for an audit, the reality is that if you intentionally submit a false return, you're likely to face an audit. And, with fewer employees available to provide support, getting answers to your tax questions directly from the IRS is harder than ever. 

That's where the CPAs and tax professionals at Brown Kinion and Company step in. Contact us for help with tax planning and preparation to ensure your individual or business return is filed correctly and you receive the refund you deserve.