How will IRS budget cuts affect taxpayers?

January, 16 2015 by Eric Linden

They are brandishing the knives again! Congress has slashed budgets, and the results will be interesting - especially where the Internal Revenue Service is concerned. According to Politico, IRS Commissioner, John Koskinen, told employees that the $346 million cut to the agency budget is bound to reduce tax collections from potential tax cheats by at least $2 billion and hurt taxpayer services. The paradox of American government spending is that it has produced trillions of dollars in debt, resulting in budget cuts for the only department that can help dig us out of this massive debt black hole. The big question is: how will these yearly cuts affect the common taxpayer?

Well, for starters, refunds could be delayed. According to The Hill, “Everybody’s return will get processed,” IRS Commissioner John 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.”

According to Colleen M. Kelley, president of the National Treasury Employees Union, “These cuts hurt everyone in our country by further eroding the IRS’ ability to provide tax assistance to millions of Americans, curb tax fraud, and collect the taxes owed that finance vital programs and services, and reduce the federal deficit.”

The IRS will not change its requirements regarding their revenue mandate which means taxpayers will be dealing with some relatively stressed out federal tax collectors. Taxpayers will feel the brunt of this in many forms, whether that be long waiting times on the phone or the resolution of audits and notices. And with long wait times comes increased interest when there’s a balance due on a notice or audit. In addition, there may be more mistakes, such as improper payouts of tax credits.

Additonally, the IRS has lost thousands of enforcement personnel - this results in lost tax revenue, which gives rise to the question: Why cut IRS funding when you have thousands of other programs that cost a fortune and do not assist in tackling the deficit?

The ongoing concern is that the IRS will have the same number of audits and the same requirements to collect revenue, but will be slower and less patient with taxpayers. Despite Koskinen’s best intentions to “protect the integrity of the filing season,” the cuts could result in a rising need for professional tax assistance.