IRSAC report warns about IRS funding

IRS building 2
A woman walks out of the Internal Revenue Service (IRS) headquarters building in Washington, D.C., U.S., on Wednesday, Feb. 17, 2016. Taxpayers have until Monday, April 18 to file their 2015 tax returns and pay any tax owed. Photographer: Andrew Harrer/Bloomberg

Cutbacks in funding have significantly impaired the functioning of the Internal Revenue Service, according to a report from an internal watchdog group.

Budgetary issues headlined the IRS Advisory Council’s recently released 2017 annual report: “Regrettably,” the report reads, “overall funding for the IRS has decreased dramatically – by approximately $1 billion – since FY2010, even though the requirements imposed by Congress have expanded during the same period.”

“Budget reductions have forced hiring freezes, training reductions, and the scaling back of both taxpayer assistance and enforcement activities …,” the report adds. “Inability to invest in modernizing the IRS’s information technology infrastructure, employee recruitment and essential training has compromised the quality and timeliness of telephone assistance and other taxpayer services, slowed the processing of refunds and the issuance of necessary forms and guidance, impaired the IRS’s ability to meaningfully address tax noncompliance through audits and other enforcement and collection mechanisms, and made more difficult the task of safeguarding taxpayer information.”

The report also covers a number of other topics, including W-2 verification codes; the private debt collection program; the large business and international examination process; establishment of minimum standards of competence for tax practitioners and return preparers; and third-party application programming interfaces.

Administered by the IRS Office of National Public Liaison, IRSAC draws its members from the taxpaying public, the tax professional community, small and large businesses and the payroll industry, and provides a public forum for tax administration issues.

The full 2017 IRSAC Public Report is on IRS.gov.

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