By Jason Bramwell
In a letter sent to Congress on September 4, the American Institute of CPAs (AICPA) urged lawmakers to provide the IRS with "sufficient" funds to perform its duties.
"The IRS needs sufficient operating funds to properly administer and enforce our complex tax laws as well as to provide assistance to taxpayers and their advisers", the AICPA wrote. The letter was sent to the chairmen and ranking minority members of the US House of Representatives and the Senate Committee on Appropriations.
According to the AICPA, the IRS received an overall budget allocation of approximately $11.8 billion in fiscal year 2012, down from approximately $12.1 billion in fiscal year 2011. The approximately $5.3 billion enforcement budget the agency received for fiscal year 2012 was reduced by approximately $200 million from the year before. IRS employment levels also have decreased, from 104,000 in fiscal year 2011 to 98,000 in fiscal year 2012.
"The IRS budget is oftentimes the subject of debate and may be even more so now given recent allegations regarding expenses incurred by the IRS and the handling of certain taxpayer matters", the AICPA said in the letter.
The IRS has been under fire recently for its role in improperly scrutinizing the federal tax-exempt status of conservative groups like the Tea Party as well as engaging in excessive spending at training conferences.
But despite the bad press the agency has received in the past few months, the AICPA stated that the collection of tax revenues and the administration of tax laws, as well as the need to provide assistance to taxpayers and tax practitioners, are important responsibilities.
"Congressional oversight of the IRS is a critical function and one that contributes to the success of the system and elevates the American taxpayer's perception of the IRS' objectivity and its ability to effectively manage the tax administration process", the AICPA wrote. "Likewise, we believe that proper funding of the IRS' budget is essential to the IRS' ability to carry out its mission."
The AICPA expressed concern that a reduction in taxpayer service resources would "negatively impact both taxpayers and our members alike." Specifically, the AICPA said it believes another decrease in the IRS' budget would likely:
- Increase wait times for incoming telephone calls from taxpayers and tax practitioners.
- Create excessive delays in responding to taxpayers' written inquiries and responses to IRS notices.
- Lead to the inability of IRS staff to meet and assist with the needs of taxpayers who visit walk-in taxpayer assistance centers.
- Result in the failure to keep taxpayers informed of tax law changes (via customer outreach, printed and online materials, webcasts, etc.).
- Exacerbate the problem of excessive delays in the issuance of administrative guidance.
- Slow down the release and update of tax forms.
The AICPA also stated that the growing burden being placed on the IRS significantly reduces its efficiency and impedes its effective interactions with taxpayers and their advisors.
"The onslaught of new issues, including administration of the Affordable Care Act and extensive new foreign reporting requirements, and the alarming increase in taxpayer identity theft cases are substantially encumbering the IRS' already limited resources", the AICPA wrote.
Another concern expressed by the AICPA in its letter to Congress is a possible decrease in the amount or quality of IRS employee training and development.
"It is important that IRS employees are kept up to date on the ever-changing tax laws to properly administer those tax laws as well as provide adequate guidance to taxpayers and tax practitioners", the AICPA wrote. "Unfortunately, the IRS is not excluded from our country's aging workforce and may continue to lose its most experienced staff to retirement. A new, less experienced staff will likely require substantial training to maintain the same quality of service that taxpayers expect."
In its final point, the AICPA asked lawmakers to consider the IRS' need for more advanced and reliable technology. The AICPA cited the agency's electronic filing system, which was unavailable intermittently last tax season due to technological problems.
"While the IRS has made strides to update online services and internal computer processing, its systems are still outdated", the AICPA wrote.