Diary

IRS Budget Cuts: The Good, The Bad, and the Ugly

Budget cuts to the IRS will be impacting citizens more drastically this year. The Taxpayer Advocate, Nina Olsen, painted a bleak picture for filing season and beyond in her annual report to Congress.

The Good:
— The number of audits will decline.

The Bad:
— Technology upgrades will be delayed, although the Commissioner, John Koskinen, is “reasonably confident — very confident” that upgrades needed to handle Obamacare related information has been successfully completed.

The Ugly:
— If you call, it is likely that only half of the estimated 100 million people will ever reach an IRS agent on the other end.

— Hold times will exceed 30 minutes or more.

— Low-income taxpayers will no longer receive assistance to fill out their tax return paperwork from the IRS.

— Processing a tax return filed by paper will ensure tax refunds will be delayed.

The option to leave a voicemail to request an appointment face-to-face at a local office has been removed, instead instructing taxpayers to “send an email” (though not everyone has email).

— The IRS is mandated to provide callers with the option to speak to a live person on its helplines, but would not even clarify to the Taxpayer Advocate which lines are designated helplines when calling in.

The IRS budget was reduced by nearly $350 million for this fiscal year. Commissioner Koskinen claims the “agency’s $10.9 billion budget is its lowest since 2008. When adjusted for inflation, the budget hasn’t been this low since 1998.” Employees may even face a two-day furlough. You almost feel bad for the guy. Almost.

Don’t forget, the IRS had requested a $1 billion increase in order to hire another 6,700 agents to assist with Obamacare compliance. That was on top of the already extra $1.5 billion the IRS budget had received in recent, prior years, along with 1,200 new agents.

To be sure, the IRS has kindly provided increased information on its website for taxpayers and tax preparers, including a section dedicated to Obamacare compliance, in an effort to cut down on phone calls. I’m sure that particularly helps all the people without ready access to the internet.

The bottom line seems to be: do not call the IRS anymore unless it is absolutely necessary.