Today the AICPA states in an article in CPA Trendlines that the “IRS in Crises”. That summarizes things pretty well. They identify a host of issues including:
· Anyone can obtain a tax exempt status today and no one is checking – this is a Congressional directive.
· False positives identifying legitimate returns as those having issues.
· Having to implement the ACA initiatives without additional funding from Congress to do this.
· Identity theft issues
· Improper Earned Income Credit fraud
· Delinquent tax collections
In another article from Government Executive they do not paint a pretty picture either. Yes, Congress did increase the IRS budget $290 million or about 2.5% after continual drops in the budget since 2010. This still amounts to about a 10% cut in the budget since 2010. At the same Congress is passing over a new code section a day and the number of returns continues to increase. Congress funded this additional $290 million for customer service type work by allowing the IRS to hire 1,000 seasonals among other things. However, the biggest item in the IRS budget is salaries. Congress has authorized federal employees to receive a 1.37% pay increase in FY 2016 (October 1, 2015 to September 30, 2016). This after years of either no or essentially no pay increases since 2010.
The Government Accounting Office (GAO) just released a report last month detailing how bad the filing system was last year entitled “Deteriorating Taxpayer Service Underscores Need for Comprehensive Strategy and Process Efficiencies”. Does Congress think that throwing $290 million in January to recruit, hire, train and retain 1,000 employees for the filing season that just started this week is a good way to manage an agency?
Last year only 38% of those calling taxpayer service received service and the average wait time was over 30 minutes. That average of 30 minutes was for the 38% that got through. Recall that the IRS was programed to hang up on callers after taxpayers were deemed to have been on the line too long. Interestingly the GAO faults the IRS for not conducting studies to determine the impact of how this has impacted taxpayers, while at the same time noting that Congress did not fund the IRS to conduct such studies.
With this as background, the IRS will certainly see increasing non-compliance with the loss of 2,000 to 3,000 agents and criminal investigation agents. Organized crime will appreciate the lack of attention. I commented previously about the IRS’ being ordered by Congress to hire outside collection agencies to collect on delinquent accounts regardless of whether this made economic since. I am also concerned about taxpayer’s being scammed by fraudulent imposters, and by contractors working for the IRS that may very well not enforcing the law properly. I have a concern that contractors may take inappropriate measures to collect delinquent federal accounts.
If this were not enough, imagine trying to run this agency with all of these constraints and now a group in Congress has indicated they are taking actions to impeach the Commissioner at the IRS. God bless the Commissioner of the IRS, John Koskinen. I don’t know why someone would take this job under these circumstances and stay, but thank goodness there are dedicated civil servants that are willing to continue to man the ship during trying circumstances.
I am reminded of the poem by Rudyard Kipling “If”. In part the poem states, “If you can keep your head, when all about you are losing theirs and blaming it on you…. then you will be a Man my son! I think that is where the IRS is at this point. This will be a difficult filing season.
If you are able to reach an IRS representative to help you, be respectful, be professional, realize the last person they spoke to probably was not, and if the person cannot answer your question ask to speak to a supervisor. The person you spoke to may not have been properly trained with a 85% cut in training funds by Congress. The supervisor may be able to answer your question or point you in the right direction. Plan accordingly.
About the author
Mike Gregory is a professional speaker, an author, and a mediator. You may contact Mike directly at firstname.lastname@example.org and at (651) 633-5311. Mike has written 12 books (and co-authored two others) including his latest book, The Collaboration Effect: Overcoming Your Conflicts, and The Servant Manager, Business Valuations and the IRS, and Peaceful Resolutions that you may find helpful. [Michael Gregory, ASA, CVA, NSA, MBA, Qualified Mediator with the Minnesota Supreme Court]