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IRS Funding

Last Updated:2015-Apr-15
Principal Writer:Barry Shatzman

Issue Sections

Understanding The Issue
Issue Status
Analysis and Perspectives
What You Can Do
The Rumor Mill

Reported News

Government Services: IRS

Related Bills

Appropriations, 2015

2014 (HR-83)

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Why should I care about IRS funding?

We admit, it's hard to find a topic less sexy than funding for the Internal Revenue Service (IRS). But the agency's budget affects you in several ways...

o If you have a question about your taxes, it affects how long it will take for you to get an answer.

o It affects how the agency can help if your identity is stolen.

o It affects whether the agency has to resources to collect tens of billions of dollars owed by corporations.

What's the situation now?

The IRS budget has shrunk each year since 2010 - with the sharpest decrease in 2013 coming from the sequester. With 75 percent of the agency's budget going to personnel, the number of full-time employees at the agency also has shrunk...

Yet the agency's responsibilities have increased significantly since then. One of these is to administer the subsidies that help people buy health insurance under the Patient Protection and Affordable Care Act.

We explain a few more of these responsibilities and issues below.

As staff decreases, so does service

Every year, there are 1.5 million more tax returns than the previous year, according to a 2013 report to Congress by the National Taxpayer Advocate. With a shrinking staff to deal with the public, if you called the IRS with a tax question, you waited almost 20 minutes to talk with an employee. Only 6 out of every 10 calls were even answered.

Dealing with a tax issue by mail? More than half of the mail the IRS received in 2013 took them more than a month to respond to.

Identity Theft - An increasing problem taking longer to fix

You file your tax return. But instead of your expected refund, you receive a letter from the IRS saying they already paid you. You might even get a bill because they overpaid you.

What happened? Someone stole your Social Security Number and fraudulently filed a return under your name. They usually do this early in the filing season, before you file and before the IRS can process the tax documents your employer submitted.

In 2010, the IRS identified around 350,000 cases of identity theft. In 2013, there were almost 3 million cases.

Although the IRS assigned 3,000 employees to work on these cases (taking them away from performing other functions such as enforcing compliance), victims can wait more than half a year to have their case resolved, according to the National Taxpayer Advocate.

For more information on identity theft, read this IRS publication.

Fewer audits - who gets audited now?

With fewer employees assigned to enforce tax laws, the IRS performs fewer tax audits - including those of high-income earners and businesses. Revenue collected through enforcement has dropped more than $4 billion since 2010, Treasury Inspector General for Tax Administration J. Russell George told the Senate in April 2014.

A much greater amount could come from enforcing taxes on international transactions - where the U.S. could recover between $40 billion and $133 billion, George estimated.

The Treasury Department estimates that every additional dollar spent on enforcement would return more than $4.

For more information...

These reports explain in detail how the IRS budget will affect how the agency operates - and therefore how it might affect you.

Click here to read a report by the IRS Oversight Board on how the 2015 budget will affect IRS operations.

Click here to read a report by the Center for Budget and Policy Priorities (CBPP) on how the 2015 budget is affecting IRS operations.

Click here to continue to the next section of this issue...

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