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Budget Cuts Prevent The I.R.S. From Collection Of Taxes

Posted on | January 14, 2012 | Comments Off on Budget Cuts Prevent The I.R.S. From Collection Of Taxes

Budget Cuts Make the I.R.S. Less Efficient, Report Claims

Reduced funding and an expanding mandate have left the Internal Revenue Service incapable of performing its primary duty of tax collection efficiently. This is according to a report released by the agency’s Internal Monitor on Wednesday.

The backlog of cases and job cuts has made the agency less capable of collecting hundreds of billions of dollars in taxes every year. This is what the national taxpayer advocate, Nina E. Olson claims in her annual report to Congress.

The agency is now using computer software to ask taxpayers to file their returns without necessarily going through the costly and time consuming audit. This has helped the agency to administer the ever-complex tax code.

She dismisses the claims made in the Internal Monitor report as baseless and inaccurate.

The report was released in the middle of a political showdown in Capitol Hill. The mandate of the I.R.S. is expected to expand in the coming years. This is because it is tasked with administering the healthcare plan proposed by Congressional Democrats and President Obama.

In the last financial year, the president asked for an increase of more than one billion dollars in I.R.S’s budget. This is to enable the agency to hire 5,100 employees.

While the proposed healthcare scheme is not yet in place, the operations of the agency have already been affected by the budget squeeze.

Due to the expanded mandate and job cuts, the IRS has not been able to respond to inquiries from the public. For instance, some taxpayers have to wait for up to six weeks to get a response to their inquiries.

While the report noted that IRS is already a well run agency, an increase in funds will increase its efficiency.


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