This year’s tax filing season, now in full swing, will be marked by increased frustration for taxpayers seeking to file their taxes accurately and on time. On top of a 10-day delay to the start of the filing season because of the government shutdown, severe budget cuts—nearly $1 billion since 2010—are hampering the Internal Revenue Service’s ability to provide taxpayer services.
The situation has gotten so bad that the IRS has had to cut some traditional services and will refer taxpayers to online resources rather than answer certain questions on the phone or in walk-in assistance centers. Taxpayers can expect to wait on hold longer than ever, to experience delays in responses to correspondence, and increasingly to be referred to websites for answers they used to obtain from an IRS customer service employee.
Victims of identity theft and taxpayers with problems on their returns will experience delays in receiving their refunds because returns that need to be handled manually will be held up by staffing shortages.
The new IRS Commissioner John Koskinen says of all the challenges the agency faces, its budget is the most intractable problem.
He is correct. The continued underfunding of the IRS by Congress during the past few years leaves taxpayers who need assistance waiting on hold, emboldens tax cheats as audit rates plummet and allows the tax gap to grow. Meanwhile, the agency can barely keep pace with the skyrocketing number of tax-related identity theft cases it is investigating.
The IRS has proved an easy political punching bag, and despite its unique position as the source for 93 percent of the federal government’s revenue, lawmakers refuse to shield its budget from deep and damaging cuts. A recent editorial in USA Today, “Congress whips IRS, you feel pain,” stated that less money for the IRS means less help for taxpayers and less policing of tax cheaters.
Increasingly, it is taxpayers who suffer. Consider these facts from Nina Olson, the National Taxpayer Advocate:
- In 2013, 20 million taxpayers who tried to call the IRS for help did not get through. There simply are not enough IRS employees to keep up with the volume of calls, leaving four out of 10 people with unanswered tax questions. Callers who actually make it into the telephone queue wait 17 minutes to speak with an IRS employee. A decade ago, that wait was less than 3 minutes.
- n The IRS has offices across the country to assist taxpayers face to face, but the impact of budget cuts on that individual help is clear. A decade ago, IRS employees fielded 795,000 tax questions at these sites. That number has fallen 86 percent; in 2013, only 110,000 questions were answered at the walk-in centers. More of these sites are now staffed by one employee, increasing wait times and potentially leaving the office closed if the employee can’t make it to work.
- Like all federal agencies, the IRS has felt the impact of sequestration and a general unwillingness in Congress to provide the agency with the resources it needs to operate. During the past three years, the agency has lost $1 billion in funding and 8,000 employees. We must reverse that trend.
- Each dollar appropriated for the IRS generates substantially more than one dollar in federal revenue, Olson says. In fiscal 2013, the IRS collected $2.86 trillion through an appropriated budget of about $11.2 billion. That translates to an average return on investment of 255-to-1. That is an outstanding ROI and should reshape the way Congress approaches the IRS budget. Providing the IRS with sufficient resources is not a cost, but an investment in our country’s present and future. The revenue the IRS collects funds all other government programs, from our armed forces to food safety to medical research. Underfunding the IRS puts those activities at risk.
- Employees are struggling to keep up with the workload and are losing the battle. Their efforts to be responsive to taxpayers took additional hits last year when sequestration forced the agency to close for three days. Then we faced the 16-day government shutdown, which affected the agency’s ability to prepare for this filing season, delaying its start by 10 days.
The evidence of a serious national problem here is overwhelming. The number of tax returns is rising significantly, and they are increasing in complexity. The size of the IRS workforce is shrinking, and the agency budget is being reduced to the point where the IRS cannot adequately perform its mission—including its critical customer service work, which is key to voluntary compliance with the tax laws established by Congress.
The solution is an obvious one: Congress needs to allocate adequate funding for the IRS that recognizes its position as a revenue-generating federal agency.
“The IRS is a unique agency in that the more resources it can deploy, the more revenue it can generate,” Koskinen said in a recent Washington Post report. “For a relatively modest amount of investment, you can have a big swing in revenue for the government.”
Revenue to provide necessary government services does not grow on trees. It comes from a system of voluntary compliance that relies on citizens to file and pay their taxes on time. The IRS must have the resources to meet its share of the bargain, to assist taxpayers in a timely manner and pursue those who are not paying their fair share. Otherwise, this historically successful system will be undermined.
Colleen M. Kelley is national president of the National Treasury Employees Union, the largest independent federal sector union, which represents 150,000 employees in 31 agencies and departments.