Two advantages over last year are that the agency is not recovering from a shutdown or implementing a new tax law, former commissioners note.
The head of the Internal Revenue Service acknowledged recently to employees that the agency is grappling with resource constraints and will face “difficult budget choices” this year, but also expressed confidence in their ability to handle the tax filing season ahead.
IRS Commissioner Charles Rettig in a note to employees Monday marking the start of tax season thanked them for their hard work and dedication year-round. “Without question, you are the absolute strength of the IRS,” he said in an internal message provided to Government Executive by the IRS. “While we continue exploring ways to improve taxpayers’ experiences, let’s recognize each of us is an 'IRS ambassador' capable of making a positive difference in every interaction.”
The National Treasury Employees Union, which represents about 70,000 IRS workers nationwide, had raised concerns last Thursday that the agency’s decreased funding, staffing and resources will affect its ability this year to conduct audits, give in-person tax assistance and collect taxes. When asked about the union’s concerns, the IRS provided Government Executive with another internal agency communication that acknowledged the resource issue, but assured employees the agency can handle the work.
“The fiscal 2020 budget, which will run through September, will provide us with a $207.5 million increase over last year, taking the agency to $11.5 billion,” Rettig wrote to employees on Dec. 23. However, “the IRS will face budget challenges this year” since the agency will experience over “$500 million in extra costs in 2020 as we fund the pay raise (about $185 million), the agency makes bigger contributions to the [Federal Employees Retirement] System ($135 million) and addressing other higher costs, including rent and inflation-based factors.”
The commissioner said there will be “some difficult budget choices in the year ahead,” such as whether or not to hire to fill critical positions across the department. The agency will have to “allocate our resources strategically,” he said. The IRS expects over 150 million individual tax returns to be filed on or before April 15. In comparison, as of April 19, 2019, there were about 131 million returns filed.
NTEU National President Tony Reardon said that although “IRS employees are committed to delivering a smooth, successful filing season and helping individuals and businesses file quickly and correctly,” due to decreased funding and staffing over the last decade, “that job, once again, will be difficult this year.”
The National Taxpayer Advocate, an independent organization within the IRS that helps people resolve tax problems, stated in its 2019 annual report to Congress that since fiscal 2010, the agency's budget had decreased by about 20% and there were about 20% fewer employees. Meanwhile the number of tax returns the agency received increased by 9%. The union said this has resulted in $381 billion in taxes owed but not collected because the IRS had to make staffing cuts and dedicated fewer employees to tax preparation and collection help.
In Rettig’s note to employees on Monday, he said there are some new initiatives this year that will improve the agency's operations. This includes: a revised Form 1040 (for individual income tax returns) that has a virtual currency option, fewer forms needed to supplement returns, alternative filing options for seniors, and improvements to the free online tax-preparation and filing program.
Two former IRS commissioners who now work at the alliantgroup, a national tax-consulting firm, agreed that the IRS would benefit from more funding to keep up on audits and tax enforcement. However, they put this year’s filing season in perspective.
“Filing season is always job one for the IRS,” said Vice Chairman Mark Everson, who served as IRS commissioner from 2003-2007. “People file their returns and they have every right to expect prompt processing and, in most cases, a speedy refund. I think that the service is in far better shape to handle this filing season than it was a year ago when it was suffering from the government shutdown and had so much work to do implementing the new tax law.”
Alliantgroup National Director of Tax Steven Miller, who worked at the IRS for 25 years including serving as acting commissioner in 2012, agreed. The IRS “stunned me last year when they were successful after the large number of changes” to the tax law, he said. Even though the IRS is not “resource rich,” the lack of a shutdown and new tax law this year “are positive as well as the fact that they have a little better budget than they’ve had the last few years.”
Tax filing season coincides with the start of budget negotiations for fiscal 2021. President Trump is expected to release his budget request on Feb. 10. In the press release, NTEU called on Congress and the White House to increase the IRS’ funding. The Treasury Department did not respond to a Government Executive inquiry over whether it will ask for more funding for fiscal 2021.
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