Washington D.C. – More than $3.3 billion in taxes go uncollected every year because the IRS has been forced to slash its staff of revenue officers by 42 percent, according to new government data.
Persistent cuts to the IRS budget means there are 1,652 fewer revenue officers available to collect taxes that are rightfully owed, depriving the U.S. Treasury and exacerbating the federal deficit.
Figures released Thursday by the Treasury Inspector General for Tax Administration show that each revenue officer in the field collects on average almost $2 million a year.
“It stands to reason that a smaller enforcement staff means less enforcement, but now we can pinpoint exactly what is at stake when the IRS loses just one revenue officer,” said National Treasury Employees Union President Tony Reardon. “Restoring a full staff of revenue officers is essential to bringing more taxpayers into compliance and increasing Americans’ faith that the tax system is fair.”
From 2010-17, the number of revenue officers dropped from 4,016 to 2,364, just part of the damage done by $845 million in budget cuts.
In testimony Thursday before the House Ways and Means Committee, the Treasury Inspector General for Tax Administration, J. Russell George, detailed how diminished IRS resources are hampering enforcement and compliance. As a result, the tax gap – the difference between what is owed and what is collected – is $458 billion a year.
The IRS is expected to update its estimate of the tax gap this summer.
“The depleted revenue officer corps is yet another illustration of how cutting the IRS budget ends up costing the government way more money than it saves,” Reardon said.
NTEU supports legislation passed by the U.S. House that would provide the IRS with $400 million in additional funding for tax enforcement and compliance activities in 2020 via a program integrity cap adjustment. The administration’s own budget proposal also recommends a cap adjustment for enforcement activities. Because enforcement is a revenue generating program, the cap adjustment would generate billions in tax revenue over ten years.
The Government Accountability Office testified Thursday that staff cuts have forced the IRS to scale back on audits, which also hampers revenue collection and compliance.
The number of individual audits has declined by 40 percent and audit rates of large corporations have declined from 17.7 percent in 2011 to 7.9 percent in 2017, the GAO reported.
“In a time of rising federal debt, Congress and the administration should remember that every dollar spent on enforcement generates up to $6 for the U.S. Treasury,” Reardon said. “Now is the time to reinvest in the men and women of the IRS so they can enforce the tax code, improve customer service for individuals and businesses and collect the revenue necessary to fund the government.”
NTEU represents 150,000 employees at 33 federal agencies and departments, including about 70,000 IRS employees around the country.