One of the leaders of the Senate’s main tax committee is sounding the alarm about proposed budget cuts at the Internal Revenue Service and warning that it could encourage identity theft, tax evasion and tax fraud by crime syndicates.

Sen. Ron Wyden, D-Ore., the ranking Democrat on the Senate Finance Committee, sent a letter Wednesday to Internal Revenue Service commissioner John Koskinen asking how deep cuts made by Congress to the IRS resources over the past several years could hamper the agency’s ability to crack down on tax evasion and fuel cyberattacks against taxpayer data.

“Cutting enforcement spending, such as by performing fewer audits, will embolden tax cheats and increase deficits, heaping a new burden onto the backs of honest taxpayers,” Wyden wrote. “Furthermore, cutting funding intended to modernize the agency’s 1960s-era IT systems makes it easier for fraudsters to steal taxpayers’ identities or hack into IRS computers. Congress ought to increase resources to the IRS if it expects the agency to bring its antiquated computer systems into the 21st century to prevent these criminal attacks going forward. Cutting resources to the IRS and similarly affected government agencies could essentially hand tax cheats and foreign crime syndicates the financial keys to the country.”

According to the National Taxpayer Advocate indicating the IRS budget was reduced by 17 percent, after adjusting for inflation, between FY 2010 and FY 2015. A further cut of $346 million passed in December 2014. An appropriations bill for fiscal year 2016 proposes an additional budget cut of $470 million, while increasing the portion of the agency’s budget dedicated to taxpayer services by $90 million, meaning the IRS must absorb $560 million in cuts in other areas. Wyden pointed to the recent data breach of the IRS’s Get Transcript application, believed to be committed by organized criminals abroad, which could have exposed the identities of up to 390,000 taxpayers and their family members (see Extra 220,000 Hit by IRS ‘Get Transcript’ Breach).

“Cutting enforcement spending, such as by performing fewer audits, will embolden tax cheats and increase deficits, heaping a new burden onto the backs of honest taxpayers,” Wyden wrote. “Furthermore, cutting funding intended to modernize the agency’s 1960s-era IT systems makes it easier for fraudsters to steal taxpayers’ identities or hack into IRS computers. We should therefore expect a surge in both the number of fraudulent tax returns filed using stolen taxpayer identities and the frequency of cyberattacks launched by foreign crime syndicates on the IRS. This will likely fuel a dangerous cycle that leads to even more refund fraud in the future. Shouldn’t the American public view diminished enforcement and reduced IT spending for what they really are: tax cuts for tax cheats and kickbacks to crime syndicates?”

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