A new report from the Internal Revenue Service suggests that budget cuts have drastically reduced the amount of delinquent taxes the agency is able to collect, with enforcement efforts collecting a total of $50.2 billion in the 2012 fiscal year, a 9 percent drop from the previous year.
However, an IRS report from early 2013 acknowledged that a program aimed at collecting previously undisclosed funds from foreign bank accounts resulted in uncharacteristically inflated collections income in 2010 and 2011. Additionally, critics have suggested that policy changes such as the IRS Fresh Start Initiative could have stifled collection revenue. That program was introduced to address complaints that the agency seizes property from filers too often.
The IRS said it was also forced to release around 5,000 enforcement workers. In all, the tax agency’s workforce shrunk by 14 percent between 2010 and 2012. The sequestration budget cuts prompted the IRS to close for three days in 2013, effectively furloughing its employees.
The IRS typically pursues debts from Texas filers who are believed to have failed to pay their taxes or paid an insufficient sum. In some cases, collection enforcement can be particularly aggressive, with the tax agency targeting filers with penalties and interest, wage garnishments, bank account levies and liens.
Despite the IRS’s warning, a group of Republicans legislators have proposed a 24 percent cut to the agency’s budget, citing inappropriately large bonuses to certain officials and excessive conference spending. In contrast, the Obama administration has called for raising the IRS’s budget by about 9 percent, a total of $9 billion in increased funding.
Private experts unaffiliated with the government have expressed concern over cutting budgets without proper planning or justification. “Oversight is appropriate. Effective administration is appropriate,” explained an executive with the American Institute of Certified Public Accountants. “But so is full funding.”
Bloomberg, “IRS Enforcement at Risk as Collections Drop 9% Amid Cuts” Richard Rubin, Sep. 18, 2013