The Internal Revenue Service is canceling the two days of unpaid employee furloughs it had planned in response to budget cuts.

IRS commissioner John Kosknen informed IRS employees that they would not have to worry about the furloughs in a message Wednesday. “Thanks to your efforts to contain costs and other steps taken during the past three months, I am pleased to announce the IRS will not need to shut down later in the year,” he wrote.

He noted, however, that the IRS had to take some difficult steps to absorb the severe cuts to its budget. “Throughout the process, we tried to balance cuts and protect critical areas as much as possible,” wrote Koskinen. “Reductions were so deep that there were concerns we might have to close the IRS for two days later this year. We always viewed this as a last resort, and we agreed to do everything we could to avoid a shutdown.”

Earlier this year, Koskinen said budget cuts could force the IRS to shut down for two days as a last resort to reduce costs (see IRS Commissioner Warns Tax Refunds Could Be Delayed by Budget Cuts).

On Wednesday, Koskinen announced that furloughs will not be necessary because the IRS has made other cuts and adjustments to deal with budget reductions.

Koskinen noted that preventing a shutdown was a high priority for both the National Treasury Employees Union and the IRS and he thanked NTEU president Colleen Kelley and her team for their support as they worked through the issue.

“We are pleased that we were able to avoid this scenario—and the resulting disruptions for taxpayers, the tax community and IRS employees,” said Koskinen. “Given the budget cuts, the IRS has been working hard to make wise reductions and find additional areas for savings. A number of difficult decisions, such as putting in place a stricter hiring freeze than was already in place, has resulted in reduced costs.”

The NTEU leader praised Koskinen’s decision. “I believe that employees should not have to deal with losing two days of pay because Congress has not provided adequate resources to IRS,” said Kelley in a statement.

Kelley said she is pleased that the NTEU’s persistence paid off in defusing the threat of a shutdown of the IRS for this year.

“The threat will return in the future unless Congress increases the IRS budget and allows the agency to hire enough staff to execute its mission,” said Kelley. “Furloughs would have devastated morale among IRS employees. As it is, employees are frustrated that they cannot help taxpayers like they used to before and taxpayers are not getting the assistance they need from the IRS.”

Koskinen acknowledged that the budget cuts were having an impact on IRS operations. “Despite avoiding furlough days, it’s clear that the budget cuts continue to hurt taxpayers and our tax system,” he said. “This is unacceptable to all of us, and I know that you’ve been doing your best during this difficult time and going the extra mile for taxpayers.”

However, he noted that tax season has been going relatively well despite the cuts.

“Even though we’ve had to do less with less, so far filing season has been running about as smoothly as we could hope, thanks to the dedicated work of IRS employees,” Koskinen wrote. “Through March 13, the IRS has already processed more than 72 million individual returns. At the same time, you and your colleagues have been able to maintain critical IT systems and focus on key enforcement efforts.”

Koskinen noted that the Obama administration has proposed a fiscal year 2016 budget that would provide IRS employees more tools to provide taxpayers with needed services.

Kelley reiterated the NTEU’s support for the administration’s $12.9 billion FY 2016 request for the IRS, an increase of more than $1.9 billion from the current level. The administration’s budget request would increase funding for taxpayer services by $252 million from the current level and boost the enforcement budget by $539 million compared to this year.

Kelley renewed her call Wednesday for Congress to boost funding for the IRS. She submitted a statement to the House Appropriations Subcommittee on Financial Services and General Government, which held a hearing today on the administration’s fiscal year 2016 budget request for the IRS.

Kelley wrote that Congress has cut a total of $1.2 billion from the agency’s budget in the past five years, which will reduce the IRS workforce by more than 16,000 by the end of the current fiscal year.

The number of IRS employees assigned to answer taxpayer telephone calls fell from 9,400 in fiscal year 2010 to 6,900 in FY 2014—a 26 percent decline. The number of Revenue Officers and Revenue Agents was down more than 3,600 at the end of FY 2013 compared to 2010 levels, and the IRS says it will lose 1,800 enforcement personnel through attrition by this fiscal year, according to the NTEU leader’s statement.

“Despite the critical role that the IRS plays in helping taxpayers meet their tax obligations and generating revenue to fund the federal government, the IRS’ ability to continue doing so has been severely challenged due to funding reductions in recent years,” Kelley wrote. “NTEU believes that only by restoring critical funding for effective enforcement and taxpayer service programs can the IRS provide America's taxpayers with quality service while maximizing revenue collection that is critical to reducing the federal deficit.”

In FY 2014, the IRS collected $3.1 trillion in revenue, or about 93 percent of the federal government’s receipts, the NTEU pointed out. But the revenue brought in by the agency’s enforcement division has been declining. For instance, IRS enforcement activities brought in $57.1 billion in FY 2014, down more than $2 billion from the $59.2 billion collected in FY 2007, according to the NTEU.

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