The ability of the Internal Revenue Service to collect federal taxes and impose future penalties and interest may be hampered by a recent decision affecting IRS workers. The tax agency is trimming its workforce in anticipation of federal cuts that could reduce its operating budget by more than 3 percent.
The federal agency is offering employment buyouts to 5,400 members of its estimated 95,000-person staff, diminishing the enforcement and collections’ power of the IRS. The IRS plans to accept 1,600 initial worker applications for buyouts in the first of what may be more rounds of layoffs. The first IRS employees planned to exit the agency are workers in back offices without direct taxpayer contact.
Lawmakers warned the IRS that up to 4,000 agency positions could be eliminated in 2012, as part of a plan to cut back federal spending. The agency’s work-buyout option comes in advance of knowing exactly what the new Internal Revenue Service budget will be.
A memo sent by the IRS commissioner to staff members was less clear about workers who would be in the second line of unemployment fire. The memo stated a “wider range” of IRS employees in “service and enforcement matters” will be offered government employment buyouts. The buyouts will most likely not be extended to most workers in satellite offices, where returns are processed during the IRS tax filing high-season that starts in January.
Senators are mulling over a bill that would slash 3.8 percent from the current IRS budget, a measure that falls 12 percent short of the budget proposed by the Obama administration. A House-sponsored bill would provide even less funding than the Senate plan. An Office of Management and Budget report estimates an IRS cutback may result in tax revenue losses of $3.5 billion.
Source: businessweek.com, “IRS Offers Buyouts to 5,400 Workers to Prepare for Lean Time,” Richard Rubin, Nov. 19, 2011