NTEU Says Cutting IRS Budget Hurts Taxpayers
by Terri Eyden on
By Frank Byrt
The union representing the IRS workforce said IRS budget cutting is hurting taxpayers, in particular, senior citizens, small business owners, and the victims of identity theft.
"When you look closely, as our members do every day, you see clearly how inadequate funding of the IRS seriously impacts the public, as well as small and large businesses, and our nation as a whole," said National Treasury Employees Union (NTEU) President Colleen M. Kelley, in an April 8 press release.
NTEU is the largest independent federal union, representing 150,000 employees in thirty-one agencies and departments, including the entire IRS bargaining unit.
A recent survey by NTEU of its IRS members about the effects of insufficient agency funding found that the lack of staff to address identity theft – a fast-growing crime focused on securing fraudulent tax refunds – means that appropriate refunds for identity theft victims can be delayed by six months to a year.
NTEU Survey Findings
- Cuts are seriously impacting the agency's ability to conduct taxpayer education and outreach, a particularly important activity for small business owners.
- There aren't enough IRS staff members to handle all the hardship cases seeking help, leading to long delays for those citizens.
- There aren't enough personnel to provide sufficient foreign language assistance, a problem that's compounded by the increasingly complex tax code.
- Taxpayers who owe money after audits are seeing higher penalty and interest charges because their cases aren't being handled on a timely basis.
- Those filing an amended return and seeking a refund are finding the processing time extended by a month – from twelve weeks to sixteen weeks.
- Those seeking assistance encounter long wait times on the telephone. In fiscal 2012, the agency was able to handle only 68 percent of calls seeking help, with callers having to wait an average of seventeen minutes on hold. By contrast, in 2004, the IRS was able to answer 87 percent of its calls, with two-and-a-half-minute average wait times.
The IRS is currently working on about 650,000 active identity fraud cases, the NTEU said, and the Treasury Inspector General for Tax Administration (TIGTA), which oversees the IRS, has warned of billions in fraudulent refunds over the next five years unless identity theft is adequately addressed.
The NTEU said that "reduced enforcement efforts caused by inadequate staffing tend to encourage scofflaws, shifting a costly burden to those who meet their tax obligation. IRS and Census Bureau data show that in 2006, the average US household effectively paid an extra $3,300 to subsidize noncompliance by others. The gap between taxes owed and taxes paid currently is put at some $400 billion annually."
"The tax-avoidance citizens are going to get away with cheating the government due to lack of resources," said one NTEU survey respondent.
The IRS has had to cut back on free tax return preparation, especially at its walk-in Taxpayer Assistance Centers (TACs). "In particular, this harms seniors and low-income taxpayers who often do not use or have computers, as well as those seeking help with a specific question or simply trying to navigate the tax code," the NTEU said.
For example, last year the IRS said 107 out of 389 TACs across the country were staffed by just one or two employees, while overall TAC staffing was half the level of eight years ago. The NTEU said, "This filing season, long lines beginning in the predawn hours well before the offices open and lengthy waits for help are common at TACs everywhere."
Kelley said the nation is ill-served by inadequate IRS funding, noting that the agency collects 93 percent of all government revenue. "The fact is that every single American pays a price when we fail to invest in the IRS."
Kelley added, "Without an effective revenue collection agency, there is not enough money to fully fund other government agencies, and that impacts such critical federal services as border security, food safety, and national defense."
Mark W. Everson, the former commissioner of the IRS, told AccountingWEB he expects to see a reduction in enforcement activities in the near future since the IRS can't maintain its current staffing levels. He predicted a reduction in the number of audits and appeals as a result of the federal budget cuts.
The IRS said in an April 5 press release that expects it will have to save almost $1 billion through cost efficiencies from fiscal year 2010 through the end of fiscal year 2013 in order to comply with federal budget cuts. "This includes a reduction of almost $600 million as a result of sequestration in the current fiscal year 2013."
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