IRS: Cut our budget, feds lose billions

WASHINGTON - Legislation that would trim hundreds of millions of dollars from the Internal Revenue Service budget would force significant cuts in the services it provides taxpayers and cost the government $4 billion annually in lost revenue, the agency warned Congress on Monday.

In a letter to lawmakers, IRS Commissioner Douglas Shulman said the budget cuts "would lead to noticeable degradation of both service and enforcement and would have a serious detrimental impact on voluntary compliance for years to come."

The House Appropriations Committee has approved a bill that would provide $11.5 billion for the IRS in fiscal 2012, which began Oct. 1. That is $600 million less than it received last year and $1.8 billion less than President Barack Obama requested.

The Senate Appropriations Committee version of the bill would provide $11.7 billion. The cuts are part of an effort by lawmakers to curb spending at a time when annual federal budget deficits have reached $1.3 trillion.

With cuts of that magnitude, IRS answers to taxpayers' letters would be delayed by up to five months and about half of those telephoning the agency would not get through, Shulman wrote. As examples, he said that would mean problems for individuals and small businesses that have fallen behind paying their taxes and want to reach the IRS to work out payment plans before they are penalized.

Shulman said the budget cuts would hurt revenue collections because it would force the agency to shrink its staffing levels, and thus to reduce its collection activities. The $4 billion in yearly lost revenue would far outweigh the cuts in agency spending, he said.

"In other words, these budget cuts will result in a direct increase to the nation's deficit," Shulman wrote.

Shulman said the proposed cuts are already forcing his agency to reduce spending, because it would not have enough time to implement them if it waited until the congressional budget process is completed.

Lawmakers will try to help the IRS ease the cuts' impact, but with the government's debt problem, "making do with less will be the rule, not the exception," said Max Gleischman, spokesman for Sen. Richard Durbin, D-Ill., who chairs the Senate Appropriations Committee panel that wrote the spending bill.

Rep. Jo Ann Emerson, R-Mo., who leads the House Appropriations subcommittee that authored that chamber's legislation, said the cuts were designed to avoid hurting collections and services but added, "Like families across the country, the IRS will have to do more with less."

Michelle Dimarob, a senior Republican adviser to the tax-writing House Ways and Means Committee, said IRS enforcement actions resulted in 17 percent more revenue in 2007 than in 2006, even though the IRS budget did not increase.

Rep. John Lewis, D-Ga., a member of the Ways and Means panel, said the reduction "makes no sense." And Colleen M. Kelley, who heads the National Treasury Employees Union, called on Congress to act to prevent the cutbacks.

[Anotheryahoo]

Ron Paul has it right, cut a bunch of these federal parasites and put the control back into the states. The federal govt is to inefficient,bloated,wasteful and pretty much screws up everything it gets involved with and the tax code is ridiculous. CLose it down.

[jcgaunet]

This article leaves out one significant piece of information: How much revenue does the IRS account for? If they have to cut expenses by $600 million (about a 5% reduction from last year), how much in lost revenue does this equate? At any rate, a 5% reduction seems pretty small to me given the current climate.

[credibility2]

Whaa, whaa, whaa! Why don't we just start by making all government employees pay into the same systems as do private sector employees. That would level the playing field and maybe add some solvency to the financial problems. We can begin by forcing them to pay into Social Security instead of their own funding, which gives them a hefty retirement guarantee.

[jmailbox]

Please the IRS is a joke, they don't go after the big tax cheaters so they scr*w the little guys who are extorted into paying more money they don't owe and probaly don't have either.

The IRS is a total waste of money and is as corrupt as other federal organizations

[starving1968-3]

by GOPeconomicterror October 18, 2011 9:26 AM EDT
So let's get this straight: under 9-9-9, average and poor Americans would pay more, while the rich would have their taxes cut. Andrew Fieldhouse, a budget policy analyst at the Economic Policy Institute, boiled it down this way: the 9-9-9 plan "only makes sense if you believe that the problem with the current tax code is that low- and middle-income households have it way too good, and they should give more of their income to those poor Americans making more than half a million dollars a year."







Lost in Cain's 9-9-9 tax plan, is the fact that the Social Security administration would no longer be funded by payroll taxes.

Does that mean that the funding for the program stops altogether?

[starving1968-3]

by Jhihmoac October 18, 2011 9:19 AM EDT
Congress cutting the IRS budget? Isn't that like "biting the hand that feeds them"?







No.

When the republicans had full control of Washington from 2001 - 2007, EVERY SINGLE PIECE of legislation that they passed, was "deficit funded". They NEVER planned or budgeted for anything.

So it's not really a surprise that they would abolish the IRS, and then pass EVEN MORE legislation with ZERO CONSIDERATION of how to pay for it.

[Jhihmoac]

Congress cutting the IRS budget? Isn't that like "biting the hand that feeds them"?

[sdemaggie]

You've gotta be kidding. This agency is running amok. When you do get through the personel are not helpful, not competent. Taxes are so automated it's nearly impossible to fix a mistake by the IRS. I recently received a $12k bill from the IRS. The notice stated the IRS is filing for a judgement against me in a court in DC (I live in Denver). Charles Schwab over stated my income by over $30k. It was a nightmare getting the IRS or Schwab to admit it was their mistake. I for one am in favor of abolishing the IRS. It's run like a mafia enforcement agency.

[Rocksman]

Treats by the IRS? Cut their budget anyhow!

[dante805]

Just make sure the cuts go to their travel and education budget. They spend millions every year on trips to hawaii and San Diego and Orlando. Stop the madness. Cut ALL budgets to ALL federal agencies 10% every year for 5 years!!!