Taxpayer Advocate: Cuts to IRS would hinder tax collection efforts
By AccountingWEB Staff
National Taxpayer Advocate Nina Olson is telling lawmakers to leave the IRS alone when it comes to budget cuts.
"IRS is falling backward in its commitment to taxpayer service and being a customer-focused organization," she said in her mid-year report to Congress, released days after the House appropriations committee approved a bill that would cut "excess spending" to the IRS, in the words of House Appropriations Chair Hal Rogers (R-KY).
"In recent years, the IRS has been given more and more tasks, but it is not receiving the resources it needs to fulfill these tasks without cutting corners," the June 29 report said. "And when the IRS cuts corners, taxpayers can be harmed and revenue collection may suffer."
Olson said the IRS has been challenged by enacting new tax credits - the First-Time Homebuyer Credit and the Making Work Pay Credit among them. The programs are complicated, prompting many more taxpayer problems and questions, yet the agency is less able to respond quickly.
Olson's report praised the IRS for its handling of the repeal of Form 1099 reporting requirements for small businesses that came out of the health care legislation. She said the paperwork would have "imposed substantial burden on business taxpayers without a corresponding compliance benefit." The IRS is intimately involved in the new health care law, and implementation will make the agency "the face of health care for many taxpayers," she wrote, pointing out, however, that it "will not be the decision-maker in most circumstances."
She faulted the IRS for the way First-Time Homebuyer Credits were processed last year, saying that the agency failed to program its computer systems to deal with the filing process smoothly.
The National Treasury Employees Union (NTEU) praised Olson's report, saying the House panel's budget would equal 4,000 lost IRS jobs. "It simply makes no sense to slash the budget of the agency that generates 93 percent of the government's revenue at a time when reducing the deficit is a national priority," said NTEU President Colleen Kelley.
Olson's report also noted several areas of focus for the coming year:
- Reducing improper Earned Income Tax Credit payments.
- Quickly resolving tax-related identify theft cases.
- Talking with taxpayers about simplifying the tax code.