IRS Needs Funding to Implement New Tax Law

Press Release February 14, 2018

Washington, D.C. – The Internal Revenue Service request for an immediate infusion of $397 million to implement the new tax law should be honored by Congress, National Treasury Employees Union President Tony Reardon said.

In written testimony to the Senate Finance Committee, Reardon said the additional funding for the remainder of the current 2018 fiscal year would allow the IRS to hire 1,600 more full-time employees, including 1,000 more to respond to the 4 million additional phone calls and written taxpayer correspondence that the agency anticipates due to the new tax law.

“The importance of providing the IRS with additional funding to implement the tax law cannot be overstated,” Reardon said. “Forcing the IRS to reallocate already limited resources from core taxpayer service and enforcement activities to implement the new tax law would further diminish its ability to carry out those activities.”

For months NTEU has urged Congress to supplement the agency’s budget to accommodate the increased workload imposed by the most sweeping changes to the tax code in the last 30 years. For example, the IRS will have to change about 450 tax products, much more than during a normal filing season.

A revised budget request the White House sent to Capitol Hill asks for the $397 million to implement the Tax Cuts and Jobs Act, signed into law in December.

About 92 percent of the additional money would pay for upgrades to the IT systems, taxpayer assistance, education and outreach.

Reardon also testified on the administration’s proposed 2019 IRS budget, calling it a setback for taxpayers who deserve personalized customer service and overall confidence that the tax law is being fairly enforced.

Reardon urged lawmakers to reject the administration proposal to slash 5,800 workers from the already understaffed agency.

“NTEU strongly believes that only by providing the IRS with additional resources will the IRS be able to meet the rising workload level, stabilize and strengthen tax compliance and customer service programs, and allow the Service to address the federal deficit in a serious and meaningful way,” Reardon said.

The White House budget blueprint, which many in Congress are already dismissing as obsolete since the two-year budget agreement was signed last week, would cut IRS staffing by more than 5,800 full-time employees from the 2017 levels, exacerbating the loss of 21,000 workers since 2010.

Depriving the IRS of adequate personnel and resources has severe consequences: With 4,000 fewer IRS professionals available to answer phones, service levels are predicted to drop from 75 percent in fiscal year 2018 to 47 percent in 2019. And cutting about 1,800 enforcement personnel means fewer revenue officers and revenue agents to collect taxes and fewer audits to catch tax cheats.

In 2017, IRS enforcement activities brought in $56.9 million, down more than $2 billion from just 10 years earlier. Audits fell 16 percent from 2015 to 2016.

“Without sufficient staffing to effectively enforce the law to ensure compliance with tax responsibilities and combat fraud, our voluntary tax compliance system is at risk,” Reardon said.

NTEU believes the administration’s initial funding request of $11.5 billion is inadequate.

“With the future workload only expected to continue to rise, the IRS will be under a great deal of pressure to improve customer service standards while simultaneously enforcing the nation’s tax laws,” Reardon said.

NTEU represents 150,000 employees at 32 federal agencies and departments.