Internal Revenue Service Commissioner Douglas Shulman last month warned Congress that budget cuts to his agency could lead to a bigger federal deficit.
The math is simple. If the IRS doesn't have enough money to enforce tax laws and collect revenue, the U.S. Treasury is the big loser.
Now the National Taxpayer Advocate Nina E. Olson has followed up Shulman's alarm, telling lawmakers that American taxpayers also will big losers if the IRS doesn't get sufficient money to do all its myriad jobs.
"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," Nina the report says. "And when the IRS cuts corners, taxpayers can be harmed and revenue collection may suffer."
Olson's assessment, which is this week's Follow-up Friday item, is part of her mandated midyear report to Capitol Hill.
"The last few years have been particularly challenging for taxpayers and the IRS, as the recently enacted Economic Stimulus Payments, First-Time Homebuyer Credit, and Making Work Pay Credit, among other tax benefits, have proven complex to claim or substantiate and have led to a significant increase in taxpayer inquiries and problems," Olson wrote in her Fiscal Year 2012 Objectives Report to Congress.
At the same time, she noted, the IRS' ability to respond to taxpayer phone calls and correspondence has declined.
On the funding side, Olson told Congress that "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. And when the IRS cuts corners, taxpayers can be harmed and revenue collection may suffer."
In previous reports, Olson has recommended that the IRS generally be exempt from budget caps or reductions. That's never going to happen.
Budget constraints are real. Every federal agency, including the one charged with bringing in the money that all of Uncle Sam's departments use, must bear some cuts.
Plus the IRS is a favorite scapegoat for politicians as well as taxpayers. It wouldn't serve tax bashers' purposes if they cut the IRS any slack on the funding front.
"Despite differing views about the appropriate level of taxation, there is widespread agreement that taxes that are due and owing under the law should be collected," Olson told Congress.
"Spending cuts mean the IRS will not have the resources to ensure that all taxpayers pay their fair share, thereby effectively forcing compliant taxpayers to pay more to subsidize noncompliance by others."
"Moreover, the IRS will not have the ability to meet the service needs of the taxpayers who are paying our nation’s bills."
- IRS budget cuts would increase the federal deficit
- The IRS is not a loan operation
- National Taxpayer Advocate is a fan of major tax system overhaul
- Improve the IRS!
- Doing the tax TAP dance
- Following Follow-up Friday
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