The Capital Press: Experts Predict Disastrous Year for IRS Due to Steep Budget Cuts

DALLAS, TX--(Marketwired - Jan 16, 2015) - In July, the House approved cuts to the IRS budget that will severely decrease the IRS's ability to carry out basic functions. These budget cuts were passed despite significant increases in IRS responsibilities due to laws like the Affordable Care Act and the Foreign Account Tax Compliance Act. Experts are now predicting that 2015 will bring one of the worst tax filing seasons in U.S. history.

The Fiscal 2015 Financial Services Appropriations Bill, passed in July, cut the IRS enforcement budget by approximately $1.5 billion. Initially intended to set the budget at $10.95 billion, amendments to the bill further reduced the IRS enforcement budget to $9.95 billion. According to the Center on Budget and Policy Priorities, the IRS budget is now 19% lower than it was in 2010, or 27% lower when adjusted for inflation. This budget continues to be slashed despite U.S. the fact that the number of federal income tax returns has increased, on average, by 1.5 million per year since 2010.

Rep. José Serrano (D-N.Y.), the top member of the House Appropriations Financial Services Subcommittee, opposed the bill, arguing that budget cuts would "prevent the IRS from going after tax cheats... and from helping those who are attempting to obey the law." 

Data on IRS performance in recent years support this statement; since the first round of steep budget cuts in in 2010, less than 1% of taxpayers are audited each year. Moreover, since 2010, revenue collected by IRS enforcement has decreased by $4 billion.

IRS Commissioner, John Koskinen, has been preparing his agency for the worst. In an email update to all IRS employees, Koskinen warned of a potential IRS shutdown and employee furlough. Meanwhile, National Taxpayer Advocate, Nina Olson has warned taxpayers that the 2015 tax filing season will rival that of 1985, when tax returns went missing, unprocessed, and delayed.

Cuts to the 2015 IRS enforcement budget would have been prevented if Congress had included funding cap adjustments in its 2011 Budget Control Act (BCA) as proposed by President Obama. The Congressional Budget Office and Joint Committee on Taxation estimated that including a funding cap in the BCA would have saved $30 billion over the next ten years.