A series of budget cuts at the Internal Revenue Service have led to declines in taxpayer service, case closures and dollars collected from delinquent taxpayers, according to a new government report.
The report, released Wednesday by the Treasury Inspector General for Tax Administration, pointed out that between fiscal years 2010 and 2015, the IRS’s budget has been slashed by more than $1.2 billion. Since fiscal year 2010, decreases in the IRS’s budget have resulted in the reduction of 21 percent of Automated Collection Service contact representatives and 28 percent of Field Collection revenue officers.
In FY 2014, revenue officers collected $222 million (or 7 percent) less than in FY 2011. In addition, they closed 34 percent fewer cases, primarily due to the decrease in the number of revenue officers.
The ACS answered 25 percent fewer taxpayer telephone calls since 2011 because there were fewer ACS contact representatives available to answer them, the report noted. Taxpayers whose calls were answered spent an average of eight minutes (or 97 percent) longer waiting for a contact representative. In addition, ACS inventory grew and became older. More cases were not resolved and were transferred to the queue, a database that houses delinquent accounts on which the IRS is unable to work.
“There is a significant correlation between the IRS’s reduced collection budget and the reduction in efficiency and effectiveness of its collection operation,” said TIGTA Inspector General J. Russell George in a statement. “The availability of key collection employees directly affects taxpayer service and the IRS’s ability to take appropriate enforcement action on delinquent taxpayers. Taxpayers may become frustrated and remain noncompliant if they are unable to reach a contact representative to resolve their tax issues.”
House Republicans have proposed to cut the IRS's budget even further by $838 million to $10.1 billion (see House Committee Approves IRS Budget Cuts). The Obama administration, in turn, has proposed an 18 percent increase in the IRS budget.
TIGTA recommended that the IRS ensure that revenue officer inventory levels are maintained at close to full capacity while ensuring the inventory levels are commensurate with the complexity of the cases; and ensure that General Schedule (GS)-13 grade revenue officers are working appropriate cases, and when possible, increase the percentage of GS-13 grade cases assigned to GS-13 grade revenue officers.
In response to the report, IRS management agreed with TIGTA’s recommendations and plans to issue a memorandum reminding Field Collection group managers to ensure that their revenue officer inventory levels are within current inventory levels and appropriate, taking into account the complexity of the cases. IRS management also plans to evaluate whether the current inventory levels for revenue officers are appropriate as part of their ongoing study in the complexity of Field Collection cases. In addition, IRS management plans to issue a memorandum reminding Field Collection group managers to ensure that their GS -13 grade revenue officers are assigned appropriate cases, and when possible, increase the percentage of GS-13 grade cases assigned to GS-13 grade revenue officers.
“The reality of these budget cuts required drastic curtailments across the agency,” wrote Karen Schiller, commissioner of the IRS’s Small Business/Self-Employed division, in response to the report. “While non-labor costs (training, technological updates, supplies) sustained the most extensive cuts, reductions to our labor workforce were unavoidable.”
She added that despite the challenges, the IRS’s collection program continues to fulfill its mission to collect delinquent taxes and in fiscal year 2014, the IRS updated its analytical models to identify and work on its most productive inventory sooner. It also enhanced its online payment agreement system and in FY 2015 realigned its Agency Collection program entirely within the SB/SE division.
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