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The IRS has more work to do and fewer people to do it. In the last six years, the number of permanent IRS employees has fallen by 18,000 and the number of returns processed jumped by 14 million. The data shows this combination means it is harder for honest filers to get the free assistance they deserve from professional IRS staff, and easier for cheaters to avoid detection. The audit rate has dropped from 1.1 percent in 2010, to 0.7 percent last year. A proposal to cut another $239 million from the IRS budget in 2018 would weaken the agency’s ability to generate the tax revenue that runs the federal government. Considering the IRS is responsible for collecting about 93 percent of government revenue, cutting the IRS budget would actually weaken the nation’s financial standing.
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Speaking of revenue, there is money to be made. At last count, there was a tax gap of $406 billion in the United States, or taxes that are owed but not collected, according to the Tax Policy Center. The IRS needs people and resources to help voluntary filers through the process and to catch the scofflaws. Shockingly, there are 38 percent fewer revenue officers on the job than there were 60 years ago, when tax law was much less complex and the financial world was less complicated. When the compliance rate drops by just 1 percent, that’s a loss to the U.S. Treasury of $30 billion a year. Instead of cuts, NTEU supports a funding request from Rep. Keith Ellison (D-Minn.) and others to allocate $12.9 billion for the agency in fiscal year 2018. Even Treasury Secretary Steve Mnuchin testified before Congress that an adequately staffed IRS means more money for the Treasury.
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Ditch the privatization. The IRS recently announced that it will start transferring some of its collection cases to one of four contractors, who will then be free to contact taxpayers directly and demand payment. This is a mandate from Congress that has been tried before in recent years, and failed. It costs more money than it brings in, and debt collectors working on commission have a record of aggressive tactics. IRS employees are better equipped to help struggling taxpayers meet their financial obligations, like the ability to postpone, extend or suspend collection activities for limited periods of time or crafting flexible payment schedules. This is a classic case where privatizing government services is actually a disservice to taxpayers. We hope the use of private collection agencies will – once again – be abandoned.
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The Baby Bust is real. The portion of the IRS workforce that is retirement eligible is fast approaching 35 percent, according to IRS Commissioner John Koskinen. Hiring freezes and budget cuts make it hard to replace them fast enough. Out of 77,000 employees, only 122 full-timers are under the age of 25. The IRS needs to be able to attract, hire and train the next generation of tax professionals, and slashing the agency’s budget only makes it worse.
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Stop identity theft. Last year, criminals filed almost 1 million fraudulent returns that tried to steal $6.5 billion in refunds before they were caught by IRS. According to Koskinen, 60 percent of the hardware run by the IRS is outdated, and 28 percent of the software. It is essential that cybersecurity at the IRS is state-of-the-art, especially as identity theft and financial scams are on the rise.