By: Henry H. Fein, Esq. & Jeanmarie Dunn-Kane, Esq.
Due to budget cuts that, adjusted for inflation, have put the Internal Revenue Service’s budget for 2015 at its lowest level since 1998, John A. Koskinen, Commissioner of the Internal Revenue Service, sent an email to IRS employees warning them to expect the following for the Service this year and for the 2015 tax season in particular:
• Staffing Cuts. As a result of the cumulative effect of the budget cuts of the past few years, the IRS expects to receive a total reduction in full time staff from fiscal year 2010 through fiscal year 2015 to be between 16,000 and 17,000 individual staff positions. Due to the reductions in staffing, the Commissioner expects that there will be delays of a week or longer in delivering refunds to taxpayers who file paper returns. Taxpayers with errors on their returns or questions that require additional manual review may also face delays. The staff reductions will also mean that there will be longer wait times for taxpayers who call the IRS during tax season. In a report released January 14, 2015, the National Taxpayer advocate warned taxpayers to expect wait times of thirty minutes, and only 43% of callers are expected to get through to a representative. This is significant when one considers that the IRS receives more than100 million phone calls during tax season.
• Information Technology Delays. Taxpayer service and cost efficiency efforts will be adversely affected as critical IT investments of more than $200 million are delayed. New protections against identity theft will be delayed. There’s also an increased risk of down time on computer systems for IRS employees, meaning that they won’t be able to work as efficiently this tax season. The Taxpayer Advocate Service won’t be able to obtain a new case management system, so services to taxpayer hardship cases will likely be hit.
• Enforcement Cuts of More Than $160 Million. There will be at least 46,000 fewer individual and business audits in 2015. A hiring freeze resulting for the budget cuts will cause the IRS to lose about 1,800 enforcement personnel. The reduced enforcement power of the IRS because of these cuts will lead to the federal government loosing at least $2 billion in revenue that it would otherwise have been able to collect. What does this mean Taxpayers? It is expected that many Taxpayers who need advice from the IRS on how to properly complete their returns won’t be able to speak to an IRS employee. In addition, Taxpayers who are currently under audit or investigation by the IRS or are participating in a voluntary disclosure program (such as the Offshore Voluntary Disclosure Program) may also see longer timeframes for their cases to be resolved.
For more information please contact via email Steven A. Loeb, Esq. or by phone at 973-538-4700 ext. 229.
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