Bad news. The IRS says it may have to furlough workers because it doesn’t have enough money to operate.

The IRS is considering its own temporary shutdown due to recent budget cuts enacted by Congress, its chief said Thursday.

IRS Commissioner John Koskinen said furloughs — forced unpaid days off for employees as part of an IRS closure — is one idea reluctantly being tossed about to save money, though they are hoping they will not have to go there.

“People call it furloughs; I view it as: Are we going to have to shut the place down? And at this point, that will be the last thing we do, … but there is no way we can say right now that that wont happen,” Koskinen told reporters at a Thursday press conference on the upcoming tax season. “Again, I would stress that would be the last option.”

This is one of those existential questions: is this a feature or bug.

The news comes a day after Koskinen in an email warned IRS employees that overtime would be suspended and a hiring freeze enacted. He also said more tough news would likely follow as IRS leadership negotiates with the National Treasury Employees Union, particularly because personnel costs comprise about 75 percent of the IRS costs.

In the recent budget deal, Congress cut the IRS budget by $346 million to $10.9 billion — $1.5 billion less than the administration asked for. The IRS’ budget has been reduced about $1 billion since 2010.

…

“It’s not just the $350 million cut in the budget; it’s the fact that we have $250 million in new expenses for a government-wide pay raise. … So we really have a $600 million hole this year,” he said.

What will the impact be? Naturally dire. Civilization will probably end, the atmosphere will ignite and the oceans will transform into pools of molten, effervescing lava.

“Everybody’s return will get processed,” Koskinen said at a news conference. “But people have gotten very used to being able to file their return and quickly get a refund. This year we may not have the resources.”

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Already, Koskinen told employees this week that the agency would have to stop handing out overtime, in all but emergency situations, and freeze hiring. The IRS will still hire temporary staff to help out during the filing season, Koskinen said Thursday.

Still, the commissioner stressed that the budget cuts will undoubtedly make life more difficult for taxpayers once the 2015 filing season opens. Taxpayers trying to reach the IRS will have only about a 50-50 shot at getting their call answered — and those that do can expect to be on hold for awhile, Koskinen said.

Let’s unpack this various claims.

Every year the IRS trots out the same claim that refunds will be delayed. It is their best shot. It is the IRS equivalent of closing the National Mall to World War II veterans. For instance, from 2013 (the 2012 filing season):

Law-abiding taxpayers could shoulder the brunt of the blow when the sequester hits the Internal Revenue Service Friday — and tax cheats might find it easier to rig the system.

It’s a little-discussed risk of the automatic budget cuts — and yet, another smack to the already battered 2012 tax filing season.

Absent a last-minute deal, the 8.2 percent funding cut facing the cash-strapped IRS will most likely translate to fewer specialists on hand to help taxpayers with their returns and to root out fraud — two tasks that watchdog groups say need more, not fewer, hands.

From the 2013 filing season:

Folks who rely on getting their tax refund quickly may need to wait even longer for their money. If there is another shutdown again in January when the government renews budget talks as part of the recent compromise that ended the shutdown, refunds could potentially be delayed further.

As you can see the same claims — delayed refunds, more tax cheats, longer wait times for assistance — are as much a feature of our taxation system as the W-2 form.

In reality, Koskinen shot himself in the foot and is now complaining because it hurts. He is a major Democrat donor who was appointed to the IRS more to stonewall investigation into Lois Lerner’s seemingly criminal dragooning of the IRS into the service of the Democrat party.

IRS Commissioner John Koskinen is in the spotlight as he is set to further testify to Congress regarding the IRS targeting of conservative groups. It is important to remember that Koskinen has shelled out nearly $100,000 to Democratic candidates and groups.

Koskinen has been contributing to Democrats for four decades, starting with a$1000 contribution to Democratic candidate for Colorado Senate candidate Gary Hart in 1979.

Koskinen has been a reliable donor over the years, contributing a total of $19,000 to the Democratic National Committee from 1988 to 2008. He has made a contribution to the Democratic candidate for president in each election since 1980, including $2,300 to Obama in 2008, and $5000 to Obama in 2012.

The Democratic Congressional Campaign Committee has received $3,000 from Koskinen since2008, and the Democratic Senatorial Campaign Committee received $2,000 from 2004 to 2006.

Hillary Clinton has received $3,800 for her various political campaigns from Koskinen.

Koskinen’s most recent contribution was $2,500 to [mc_name name=’Sen. Mark Warner (D-VA)’ chamber=’senate’ mcid=’W000805′ ] (D., Va.) in February of 2013.

When he did testify, rather than taking the opportunity to establish a clean slate and bring miscreants to justice, he treated the Congress with utter contempt and, as it turned out, lied to them about the fate of the mystery missing emails and Lois Lerner’s fortuitous “computer crash.” As a result, he’s hardly established the kind of professional relationship that is needed to run an inherently unpopular and reflexively abusive agency.

Even if everything that Koskinen claims is true, those claims are more of a call for tax reform than they are for additional IRS people. EITC and other programs need to be tightened to prevent fraud, I’d argue they need to be done away with completely but the constituency supporting them is just too powerful. But given the IRS’s record on enforcing the law, one has to suspect that the agency has decided to simply not touch it… moreso now that it has been opened to illegal aliens:

President Obama’s unilateral executive action on immigration will make hundreds of thousands, perhaps more than a million, illegal immigrants eligible for federal transfer payments. That will be done primarily through two widely used programs — the Earned Income Tax Credit, or EITC, and the Additional Child Tax Credit, or ACTC.

As it turns out, those two programs are already among the most corrupt and fraud-ridden in the entire federal government. A newly-released report from the inspector general of the Internal Revenue Service confirms that the EITC is plagued by fraud (which was already well known) and also reveals for the first time that the ACTC is even worse.

The two programs, intended for low-income workers, are what is known as refundable tax credits. That means they give workers a tax refund that is larger than their tax liability. So a family with a tax bill of $1,000 might receive an EITC “refund” of $5,000, meaning the family doesn’t write a check to the government but rather receives a check from the government. The ACTC works similarly for low-income workers with children.

Supported by both political parties over the years, the programs were intended to encourage work and strengthen families. Their growth has been extraordinary in recent years — payments increased 40 percent from 2007 to 2012 alone. And now both are beset by staggering levels of fraud.

According to the inspector general, the IRS paid out $63 billion in EITC benefits in 2013. Of that, 24 percent, or about $15 billion, was given improperly to people not qualified to receive it. That improper payment rate has been enough to qualify the EITC as a “high risk” program for years.

The IRS paid out $26.6 billion in ACTC credits in 2013. The inspector general reports the child credit improper payment rate for that year was somewhere between 25.2 percent and 30.5 percent — worse than the EITC.

One also has to question why the IRS is in the tax advice business given that receiving wrong advice from the IRS doesn’t give you safe harbor from penalties and interest and the IRS provides wrong answers frequently. Rather than, as they used to say, “keep to their knitting” the IRS has made an ill considered attempt to establish itself as a regulatory agency governing income tax preparers and decided to act as political goon squad at the behest of the administration.

In short, it is hard to see a downside to the IRS budget cuts and it couldn’t happen to a nicer bunch.