Washington, D.C.—Today, a leading expert on the Internal Revenue Service (IRS) identified underfunding as one of the most critical problems facing the agency and America’s taxpayers, a warning the National Treasury Employees Union (NTEU) has been raising with each successive budget cut, the leader of the union representing the IRS workforce said.
In her 2012 annual report to Congress, Taxpayer Advocate Nina Olson identified chronic underfunding of the IRS as one of the top problems facing the agency, noting that the IRS budget had been reduced in each of the last two years and may face further cuts in upcoming budget deliberations and the sequester.
“Failing to fund the IRS adequately undercuts the ability of other federal agencies to perform their missions, hampers efforts to close the $400 billion annual tax gap and address the deficit,” said NTEU President Colleen M. Kelley.
“Taxpayers are already feeling the impacts of underfunding the IRS with fewer phone calls answered and difficulty getting face-to-face assistance,” said the NTEU leader. Overall, IRS staffing is down precipitously. The IRS carried out the 2012 tax-filing season, processing nearly 236 million tax returns, with 5,000 fewer employees than a year earlier.
“Even with decreased staffing, IRS employees are helping taxpayers deal with an increasingly complex tax code, but workers are stretched to the limit in trying to respond to questions, as the report demonstrates,” said Kelley. “This year, a delay in the start of the filing season will further strain the agency.”
Calling the IRS the “de facto accounts receivable department of the federal government,” Olson said “the plain truth is that the IRS’s mission trumps all other agencies’ missions, because without an effective revenue collector, you can’t fund those other agencies.” The IRS collects some 93 percent of all government revenue.
“Underfunding the IRS endangers our country’s border security, food safety, national defense and all of the vital government services we rely on,” Kelley said.
As President Kelley has long argued, Olson identified several areas where underfunding of the IRS is the wrong move, including a failure by Congress to take into account the extremely favorable return on investment from every dollar appropriated to the IRS.
In particular, her report noted that limited resources impede the agency’s ability to conduct education and outreach to taxpayers, particularly small business, and to enforce tax laws, all contributing to a growing gap between taxes owed and taxes paid.
The Olson report recommended that the IRS be “fenced off” from spending ceilings and be sufficiently funded to maintain an appropriate balance between high-quality taxpayer service and effective tax-law enforcement, a position NTEU has supported in congressional testimony.
President Kelley said that sufficient IRS funding, along with the necessary staffing and training, are key to avoiding the kinds of problems all-too-common during the 2012 filing season.
For example, she said, staffing levels at Taxpayer Assistance Centers (TACs) across the country were woefully inadequate, with taxpayers lining up to enter IRS offices well before those offices were even open and with some people being turned away.
The problems were not confined to the 398 TACs, either. As Olson noted in her report, the agency’s ability to answer phone calls on a timely basis and to answer letters was sharply impeded. In fiscal 2012, Olson said, the IRS was able to answer only 68 percent of the calls it received, with callers having to wait an average of 17 minutes on hold. In 2004, by contrast, the agency was able to answer 87 percent of all calls and the average wait time was 2 ½ minutes.
“These problems do not occur in a vacuum,” President Kelley said. “They impact real people with real tax questions and issues, and in the long run, they have a serious impact on our nation’s financial situation. We cannot let this continue, particularly when the solution is so clear.”
NTEU is the nation’s largest independent union of federal employees, representing 150,000 employees in 31 agencies and departments.