When you receive poor customer service from a company, it's often because its customer service department is understaffed. It's the same with the IRS, which has been rocked by past and upcoming budget cuts. The cuts can have a meaningful impact on how easily you're able to prepare and file your tax return, and they could have a serious adverse effect on the whole country.
Here's the news: Congress, led by the GOP, has dealt another big budget blow to the IRS in its latest omnibus bill, which was just passed. The bill is meant to fund the federal government for the next fiscal year, preventing a government shutdown, but it contains a host of provisions that Republicans inserted and that Democrats have decried. One hotly contested provision is a reduction in funding for the IRS.
Cutting the IRS' budget is like starving the goose that lays golden eggs. It makes little sense.
An agitated advocate
Many don't know her, but we have a National Taxpayer Advocate in Washington, representing our tax-related interests. Nina Olson issues a big annual report to Congress, highlighting what she sees as the biggest problems with the IRS, and funding cuts have been high on her list for years now.
She has noted that between fiscal year 2010 and fiscal year 2013, the IRS budget has been cut by more than 8%, while full-time employee head count has dropped 8% and training spending for IRS employees has plunged 87%. Meanwhile, the number of tax returns being filed has risen more than 8% and the IRS' workload has increased in other ways, too, thanks to stresses including the growing problem of identity theft. As a result, taxpayers calling the IRS with questions have seen their average wait time surge from 2.6 minutes in 2004 to nearly 18 minutes in 2013, and only 61% of those 2013 calls were answered.
Here's the craziest thing about the situation: While lawmakers might support IRS cuts because they're interested in reducing our budget deficit, they are in fact being extremely counterproductive. Check out this mind-blowing stat from Olson's office: "In FY 2013, the IRS collected $255 for each $1 it received in appropriated funds from the federal government."
Think about that. That's a massive potential return on taxpayer money, and it's being ignored. If we want more money for infrastructure and law enforcement and education and a host of other vital societal services, we need funding. And the IRS is standing ready to collect money that is owed to it. It just needs the funding to do its job. It would actually make a lot more budgetary sense to increase IRS funding so that more money could be collected.
According to Bob Greenstein of the Center on Budget and Policy Priorities, the proposed 2015 funding level for IRS enforcement is 20% below 2010 levels, adjusted for inflation. "Due to budget cuts, the number of IRS staff devoted to enforcement has dropped by 15 percent since 2010." Thus when people or businesses claim more tax deductions or credits than they qualify for due to misunderstandings or fraud, there's a smaller chance that the lost revenue will be recouped. Per a Treasury department estimate, a $1 investment in IRS enforcement yields a $6 return. Greenstein opined, "Congress [has failed] American taxpayers by not giving the IRS what it needs to enforce the tax code."
Consider contacting your representatives in Congress to share your opinion on this. Also feel free to comment below.