Tax Filing Season Going Smooth despite IRS Budget Woes

The major challenges facing the IRS today are its budget situation, which affects both service and enforcement, IRS commissioner John Koskinen told the Tax Section of the New York Bar Association.

“No challenge is more critical than our budget situation,” he said. “Our funding has been reduced every year for the last five years. A major challenge is to help people to understand how the IRS is going to do less with less. Both enforcement and service will suffer.”

Yet, despite the budget situation, the tax filing season so far is going well, Koskinen indicated.

“Five weeks into the tax season, everything is going well. Through February 13, we received over 40 million returns and have issued over 30 million refunds of $100 billion dollars,” he said. In fact, the “Where’s My Refund?” link on IRS.gov has so far generated more than 100 million hits, he added.

Audits for individual taxpayers last year dropped to the lowest level in five years, the commissioner noted. The IRS audited 1.2 million individuals last year, down by 150,000 from the year before, Koskinen said.

“The number of audits is fewer because the number of auditors is fewer,” he said. He placed the number of auditors at 11,600, the lowest in a decade, due to budget cuts at the agency. In urging increased funding, he noted that every IRS employee generates $1.2 million in revenue a year when they are fully trained.

“We’re also concerned with cuts in the services we provide,” he said. “Taxpayers will continue to see longer wait times on the phone. In that regard, I’m sorry to say that the Practitioner Priority Line is becoming something of an oxymoron. The waits are beginning to rival those of the regular taxpayer helpline.”

Among other items affected by the budget, Koskinen said, were needed improvements in information technology. “Despite a decade of upgrades, we still have old technology,” he said.

The ability to issue guidance could also suffer, he noted. “We may be at the point where we have to scale back guidance,” he said, noting that the number of attorneys in the Office of Chief Counsel has declined 11 percent through attrition.

However, administration of legislation such as the Affordable Care Act and FATCA cannot be scaled back, since they are mandated by Congress, Koskinen observed.