The Internal Revenue Service is suffering from three years of budget cuts and sequestration, both of which are crimping the agency’s ability to bring in revenue, enforce compliance and train its employees to protect taxpayer rights, the National Taxpayer Advocate said.
In her 2013 annual report released Thursday, Taxpayer Advocate Nina Olson expressed “deep concern that the IRS is not adequately funded,” noting that in fiscal 2013 it was able to answer only 61 percent of the 100 million phone calls logged from taxpayers.
“The year 2013 was a very challenging one for the IRS,” she said. Cuts under sequestration translated into reduced taxpayer service while “public trust in its fairness and impartiality was called into question because of reports the IRS subjected certain applicants for tax-exempt status to greater review based on political-sounding names.” October’s government shutdown in turn upended preparations for tax filing season requiring a delay in the schedule.
“The IRS is the federal government’s accounts receivable department and generates a substantially positive return on investment,” she said, adding that in fiscal 2013, the IRS collected $255 for each dollar it received in appropriated funds. “It is therefore self-defeating to treat the IRS like a pure spending program in which a dollar spent is simply a dollar spent. With the IRS, a dollar spent generates many dollars in additional revenue and thus helps to reduce the budget deficit.”
Budget cuts also restricted staff training, Olson continued, employee preparation that is needed not only to keep up with the evolving complexities of tax administration but also in how to protect the rights of taxpayers. Budget cuts have forced the IRS to cut its overall training budget by more than 85 percent and training hours for key employees by up to by 89 percent since fiscal year 2009, the report said.
The agency’s approach to training, she added, should also include deeper and more widely distributed instruction on taxpayer rights. “A lack of continuing education on taxpayer rights negatively reflects on employees’ ability to assist taxpayers and protect their rights because the basic knowledge acquired at initial training gradually fades over time without continuing education or reminders about how rights apply in specific contexts,” said Olson, who has long recommended that the IRS create a formal Taxpayer Bill of Rights.
The report drew an amen from Colleen Kelley, president of the 150,000-member National Treasury Employees Union. “The IRS collects 93 percent of all government revenue, funding every other activity the government undertakes from the military to food safety,” she said in a statement. Yet currently, “All the numbers that should be going up—taxpayers helped, calls answered, tax issues resolved, training completed—are going down, while all the numbers that should be decreasing are rising—identity theft cases, telephone wait times, delays in answering letters.”