Shrinking the Internal Revenue Service’s budget could diminish the power of the IRS as a collection agency and sharply cut its ability both to discover tax cheats and to help Texas taxpayers, a tax monitor has warned.
The IRS budget for the year is $11.8 billion, or a $300 million reduction from last year. It, however, is $1.5 billion under the amount requested by President Obama. The president said his budget proposal would have bolstered collection efforts and brought in more funds, but Congress disagreed, saying that like Americans in a tough economy, the IRS would have to do the same work with fewer resources.
The tax monitor issued her report just a few days after the IRS reported that American taxpayers and companies paid $385 billion less than they should have in 2006. That’s the latest year for which figures were available. The IRS took in more than $2.3 trillion in 2011.
Her report said that the IRS, as the government’s accounts receivable team, lacks the power to maximize its collection, she said.
One of the IRS’ toughest jobs today is to detect fraud. In 2011, for example, the IRS dealt with more than 225,000 instances of identity fraud. That fraud often is carried out by people who use someone else’s Social Security number, then file early before the real taxpayer files. By then, a return already has been issued. Or, frequently, people submit false returns pertaining to costs that are hard to detect.
The tax monitor said the IRS owes it to law-abiding taxpayers to stop tax cheats. A weakened IRS could mean more tax cheats slipping through the cracks, while everyday Americans are stuck with the consequences.
Source: Associated Press, “Report: Shortchanging IRS budget hurts taxpayers,” Alan Fram, Jan. 11, 2012
