Reduced IRS Budgets = Reduced Revenue and Service
Everyone agrees there’s a problem at the Internal Revenue Service (IRS), the question is: who is responsible? IRS Commissioner John Koskinen has described an “abysmal level of service,” and the numbers bear out the Commissioner’s concern.
While the agency handled more than 137 million tax returns in 2015, it only managed a level of service of 37.6 percent, which means that fewer than six out of every ten people who call an IRS call center do not speak to a customer service representative. For those that do, the average wait time for taxpayers on hold climbed to 23.5 minutes, from 14.4 minutes in 2014. Fortunately – or unfortunately – it is not difficult to find the direct cause of these poor numbers.
Since 2010, Congress has cut the agency’s budget by more than $1.2 billion, a 17 percent cut. In March, 2015, Commissioner Koskinen said, “The underfunding of the agency is the most critical challenge facing the IRS today.” Its workforce has been cut by more than 18,000 employees in that time, despite a rising number of tax returns to process every year. Donna Hansberry, supervisor of the Tax Exempt/Government Entities Division of the IRS likened the agency to a “self-service store” in a speech last November.
Regrettably, Congress is approaching the IRS budget for fiscal year 2017 in the same fashion it has since 2010, proposing more than $236 million in additional cuts, or $766 million less than President Obama’s FY2017 budget request. The President threatened to veto the funding bill as it currently stands, for this reason. The formula is simple: Reduced funding, plus fewer employees, plus more tax returns to process, equals more reductions in service to taxpayers, delays in tax refunds, and reduced enforcement operations to combat fraud and abuse.
Commissioner Koskinen outlined what the real impact on the IRS is: “We estimate the drop in audit and collection case closures this year will translate into a loss for the government of at least $2 billion in revenue that otherwise would have been collected. Essentially, the government is forgoing billions to achieve budget savings of a few hundred million dollars, since we estimate that every $1 invested in the IRS budget produces $4 in revenue. The cumulative effect of the cuts in enforcement personnel since Fiscal 2010 is an estimated $7-8 billion a year in lost revenue for the government. As some have called it, this amounts to a tax cut for tax cheats.”
The solution is to provide the IRS the resources it needs.
No less of an authority than former Senator George Voinovich, a Republican from Ohio, was prescient when he addressed his colleagues about what agencies should do when Congress does not provide the funding and resources all agencies needs to operate: “It just drives me crazy that more departments don’t really stand up and start raising you know what when we don’t give you resources you need to get the job done, particularly in management . . . I think you ought to stand up and fight and not get rolled. Make a big deal out of it. Get the president involved. If I’m going to get the job done I’ve got to have the tools to get that job done.”
The American public would have a much better chance of getting the service they deserve and expect if agencies receive the resources they need. Let us not forget that the IRS – and every other federal agency – is charged solely with accomplishing duties mandated by Congress. While the IRS is a high-profile example of an agency providing declining service due to the lack of resources, agencies across the government face the same challenges when budgets are cut. And looming over all of these discussions is sequestration, the disastrous law of the land that many seem to have forgotten about.
For its part, Congress can and should rethink its approach to funding agencies, consider Mr. Voinovich’s poignant words, and provide the resources the IRS, the Social Security Administration, the Department of Defense, and all agencies need to perform its work effectively and efficiently. And managers at all of these agencies should rise up and heed Mr. Voinovich’s call. The Federal Managers Association will do its part to voice its members’ concerns and demand resources to allow them to best serve the American public.
Posted in Hear it from FMA