There's A Crisis At The IRS And It's Not What You Think

The IRS is, however, an insular, often tone deaf and sometimes bumbling bureaucracy which is being starved of the resources it needs to do its job.  Since 2010, its Congressional appropriations have fallen 7% —-and that’s in nominal dollars, before any adjustment for inflation. During the same period, its appropriations funded workforce has shrunk by 10%, with enforcement staff down 15%, according to numbers Congress’ Government Accountability Office released last week. Meanwhile, the tax agency’s workload has increased with the explosion of identity theft tax refund fraud; a 4% growth in returns filed; and new laws to administer, including the Affordable Care Act  (a.k.a. Obamacare).

 “The IRS is in crisis and it’s not the crisis that everybody thinks it is,’’ IRS Taxpayer Advocate Nina E. Olson said in an interview. “It’s  a crisis of insufficient funding and too much work and  now, insufficient skills in our employees who are not being trained,’’ she added. Faced with both a budget crunch and embarrassing revelations  about silly spending on conferences, including the production of Star Trek and employee line dancing videos, the IRS slashed training spending in 2013 to 83% below its 2010 level.

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House Republicans have, of course, blocked any funding for the IRS to process or police the new health insurance subsidies (technically, refundable tax credits) that are at the heart of Obamacare.  The new credits are sure to create confusion during the next filing season and the IRS projects that without more funding just 53% of callers will be able to get through to a human being in 2015.  Beyond clogged phones,  “the affordable care act is so controversial that it’s going to wash over the agency just like the 501(c)(4)  stuff did,’’ further eroding the IRS’ popular support, Everson predicted.  He worries that declining support for the IRS, combined with falling enforcement, could create a “bad cocktail” that makes younger generations less likely to comply with the tax law.

There's A Crisis At The IRS And It's Not What You Think