IRS Budget Cuts Hurting Operations

IRS Budget Cuts Hurting Operations

A pair of reports released Wednesday highlight the impact of yearly budget cuts on the Internal Revenue Service’s activities.

The Internal Revenue Service Advisory Council released its annual report for 2015 on Wednesday to the IRS Commissioner, containing recommendations on a wide range of tax administration issues.

One of the top recommendations from IRSAC is the IRS needs sufficient funding to operate efficiently and effectively, provide timely and useful guidance and assistance to taxpayers, and enforce current law, so the integrity of, and respect for, the U.S.’s voluntary tax system is maintained.

The IRSAC report noted that overall funding for the IRS has decreased approximately 17 percent on an inflation-adjusted basis since fiscal year 2010 and is now below fiscal year 2009 levels. The reductions do not include the effects of the unfunded mandates of significant new program costs, like administration of the Affordable Care Act and other laws, imposed on the IRS, the report noted.

“The IRS has managed these massive downward adjustments in its funding by scaling back activities, freezing hiring, limiting training, and using limited budget flexibility to reallocate resources among its four appropriations accounts and the programs they respectively control,” said the report.

IRSAC noted the budget cuts have already had a significant and negative impact on both taxpayer service and enforcement functions of the IRS, inhibiting its ability to carry out its mission.

"In our view and in the views of others, the adjustments forced by recent budget reductions have had substantial and widespread negative impacts on the agency, all of its 81,279 personnel, federal taxpayers, state taxpayers whose state tax-related obligations are affected by interaction between their state tax system and the IRS, and taxpayer representatives (the attorneys, certified public accountants, enrolled agents, software providers, and others who assist taxpayers in filing their tax returns and dealing with the resulting obligations that flow from them)," said the report. "Thus, the reductions affect all the issues with which IRSAC and taxpayers generally are concerned.” Read more on Accounting Today.