NTEU’s Tax Day List of 3 Important Things Taxpayers Have Lost

Press Release April 16, 2018

Washington, D.C. – The National Treasury Employees Union is marking Tax Day 2018 with an alarming list of what taxpayers lose when the Internal Revenue Service is hobbled by a smaller budget and fewer staff.

Since 2010, the IRS has lost $715 million of its operating budget and nearly 22,000 full-time employees, and the consequences negatively impact every taxpayer in the country. As Congress considers funding levels for 2019, the frontline civil servants at the IRS don’t want the public to lose sight of what is at stake when the agency responsible for collecting 93 percent of the nation’s revenue is drained of the resources necessary to run a smooth filing season and enforce the recently overhauled tax code.

1. Easy access to customer service representatives. The IRS has 371 Taxpayer Assistance Centers around the country where professionals are available during regular business hours to meet face-to-face and answer questions. But as the National Taxpayer Advocate has pointed out, that is 30 fewer than there were just seven years ago. And more than 100 of those centers have zero or one employee, making it even harder to get an appointment. Speaking of appointments, Fiscal Year 2017 was the first full year that an appointment was necessary at the Taxpayer Assistance Centers, replacing the previous policy of walk-ins. The result? The number of taxpayers served in-person dropped by 1.2 million between 2016 and 2017, adversely impacting low-income Americans and other individuals who require additional assistance for their basic inquiries. And for those taxpayers who do make it in the door or reach a Customer Service Representative, it is only during tax filing season that they can have their basic tax law questions answered.

“If the intent is to tarnish the reputation of the IRS in the eyes of the public, choking off the agency’s ability to provide basic customer service is a good place to start,” NTEU National President Tony Reardon said. “But I’m here to make sure that the blame falls where it is deserved: Not on the civil servants who have dedicated their careers to the IRS, but instead on the elected officials who repeatedly starve the agency of money and resources.”

Since 2010, the Customer Service Representative corps -- in person, online and telephone assistors – has fallen by 56 percent. This means there are almost 12,000 fewer tax professionals available to answer questions, just as the agency starts implementing the largest rewrite to the tax code in 30 years. The agency’s training budget has been slashed by 75 percent since 2009, further impeding taxpayer services. The agency’s own conservative estimate is that call volume will increase by 4 million as taxpayers start thinking about their 2018 tax obligations under the Tax Cuts and Jobs Act, and it is not too early to ramp up the staffing and professional development to handle it.

2. The right to settle an overdue tax bill with a public servant instead of a private debt collector. It’s been one year since the IRS, under a misguided congressional mandate, started referring federal tax debt collection cases to private contractors, and the results prove the program is inefficient, harmful to lower income Americans and an affront to the IRS workforce. According to the National Taxpayer Advocate, the program cost $20 million to operate in Fiscal Year 2017, and during the same time, the IRS received $6.7 million from taxpayers whose debts were referred to the private collection agencies. Once again, it costs more money than it generates.

“Congress has twice ordered the use of private debt collectors and both times it failed. Now there is mounting evidence that the third effort is equally flawed and should be abandoned,” Reardon said.

Of the taxpayers who were forced to deal with the private collectors in the last year, 44 percent had incomes below 250 percent of the poverty level and many of them were lured into installment agreements that they could not afford. Instead, NTEU prefers that the professional civil servants of the IRS do the work they are trained to do. IRS employees have more taxpayer-friendly options than the debt collectors, such as the ability to postpone collection activities for limited periods of time, waive late penalties, or negotiate an agreement to settle a tax debt for less than the full amount owed. Americans who are struggling financially should be able to deal with a public servant, not a ruthless for-profit debt collector working on commission.

3. Confidence that our system of voluntary tax compliance is fair to everyone. Paying taxes isn’t entirely based on the honor system, but it’s close, which means it only works if everyone believes it works honestly. A key piece of that is knowing that the IRS has the capacity to catch those who don’t comply, and the agency’s own statistics show that enforcement capacity has diminished under several years of budget cuts. There are 7,700 fewer revenue officers and revenue agents than there were in 2010, a drop of 32 percent. The agency audited only 934,000 individual income tax returns in 2017, the lowest number since 2003. The audit rate – now at 0.6 percent – is the lowest in 16 years. A former IRS commissioner repeatedly told Congress that for every 1 percent decline in the compliance rate, the government misses out on $30 billion in revenue.

“Americans should be alarmed that taxes go uncollected because the agency charged with enforcing the tax code has been handcuffed by a lack of adequate staffing and funding,” Reardon said. “This is a classic penny wise, pound foolish situation, where legislators believe they are saving money by cutting the IRS budget when in fact they are exacerbating the federal debt.”

There remains a tax gap of $450 billion, which is money owed to the Treasury but not yet paid. It can never be fully eliminated, but giving the IRS the resources it needs is a good way to put a dent in the nation’s $20 trillion debt.

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


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