Newsletter 2015
Newsletter 2015
IRS Woes
IRS Woes
Print Full ArticleLast Reviewed: Jan 2016
Last Modified: Jan 2016
It all started when IRS targeted nonprofit organizations that looked like they were cheating by hiding their political fundraising under the umbrella of a not-for-profit, charitable organization. Congressmen, who by the way receive lots of money from these political groups, got angry that IRS was singling out these groups for investigation and ended up cutting IRS' budget. We are seeing and feeling the impact these budget cuts have had on IRS right now. And it looks like things will get worse before they get better.
Before you think maybe this is a good thing, consider the impact to you and your fellow Americans. What if the person that reviews your return is poorly trained, or makes a mistake when calculating your tax after an adjustment? Or what if no one is available to process your refund claim for four months because of staff cuts? Or what if you (or we) have a simple question to ask about your return or the tax law and want to call IRS. Well, you can forget about that last one. There isn't even a wait time for some IRS phone lines anymore. The message simply informs you they are not answering the phone!! As for the other examples, we have seen all of them occur in the last year.
To give you a sense of the scale of their cuts, one source reports they have lost almost 20% of their 2010 funding level after adjustments for inflation and have 13,000 fewer employees. There was a slight increase in their budget allocations for 2016 ($290 million), but nothing close to the $2 billion increase they requested to try to restore services and service quality. All of this occurs at a time when IRS is taking on more responsibilities, most notably policing compliance with the Affordable Care Act.
Our expectation is that things will be getting worse over the next few years as the IRS deals with both a freeze on hiring and attrition from retirement and has to cut back on training and investment in new programing. As much as we may grumble about the IRS, we used to at least admire them for their efficiency and very low error rates in the adjustments they made. This, we fear, is in the past and now we need to look carefully at the notices IRS sends to check for errors and take the time and, regrettably, incur the expense of correcting any errors we see through lengthy mail responses.
