IRS Budget Cuts - the Real Story

[Corduroy Frog]

The title suggests I'm going to tell of some earthshaking truth behind the budget cuts at the IRS. Fact is, I don't really know the truth.

My long years of dealing with government agencies, however, have me very suspicious. First of all, my guess is that this did not really happen without the consent of the IRS Commissioner and Sec of the Treasury. I believe they can derive some BENEFIT to the cuts.

Will anyone venture what benefits there could be? For one, I see the real harm will come to taxpayers who are trying to defend themselves against the largesse behavior of the IRS that we have become accustomed to. As preparers, we are going to be affected horrendously.

The only ray of shining light from the govt has been the TaxPayer Advocate. Nina Olsen's people have already been dealt an impossible hand trying to get the IRS to do their job. Further cuts could render the TaxPayer Advocate unable to help anyone, and so ineffective that no one will avail themselves of this service. Two years of this could shut down the office altogether.

Already we as preparers involve ourselves in answering CP2000 and other notices, attempting to cancel levies, and other services that the IRS has been able to successfully throw up a brick wall. The effect of more cuts mean that corrective action expected from the IRS is postponed indefinitely. As most of you know, their collection office does not wait on the audit division to act, even on obvious items. It is quite convenient for the collection division to take the position that they "can't change anything".

As I see it, the so-called "IRS budget cuts" will do absolutely nothing to stop them from steamrolling taxpayers. What they lose in audit capabilities they will gain in collections and assessments which are uncontested.

As preparers, we should familiarize ourselves with the assessment and collection processes in place. In particular, response to the 90-day notice is more critical than ever.

Anyone else care to comment on this horrible budget-cutting inflicted on those poor souls at the IRS??

[ATSMAN]

I am telling my clients to take all this news with a few grains of salt.

Just because IRS may do fewer audits not to let their guard down because if they are the unlucky 1%, it may not mean any difference !

I am telling them that the wait time for calls will be high and it is possible that they may not see their refund within 21 days.

I just did a return last night and they were counting on the refund (over $4K) to pay some serious credit card bills already piling up! Did not sit well with them.

[DaveO]

When I talk with an IRS agent on the phone I always ask about their office and work load. Recently I spoke with an agent in Florida in the partial pay installment agreement verification area. They were doing the annual review of a client's installment agreement. I asked what his territory was and he said his office covered the eastern half of the US with a staff of 13. Ten years ago they had over 50 agents covering the same area. He said he had nearly 40 years with the service and wouldn't be around for the next review. Anecdotal, I know but it doesn't paint a pretty picture.

The Taxpayer Advocate office here has only three agents down from 10 only 5 years ago and that I know directly.

We are raising our fees for answering a CP2000 notice and if for a return we did not prepare taking a $500 retainer before we start.

[Bees Knees]

IRS gains absolutely nothing from the budget cuts. The cuts are the result of Congress punishing them for targeting conservative tax-exempt groups and wasting money making dumb Star Trek videos. That's all. The end result is they have less people to do audits and answer the phone and process paper filed returns. That's it. No mystery. Its typical Congress cutting off their nose to spite their face.

[ATSMAN]

IRS gains absolutely nothing from the budget cuts. The cuts are the result of Congress punishing them for targeting conservative tax-exempt groups and wasting money making dumb Star Trek videos. That's all. The end result is they have less people to do audits and answer the phone and process paper filed returns. That's it. No mystery. Its typical Congress cutting off their nose to spite their face.

Make no mistake when taxpayers are irritated by slow service the administration will point where the blame lies!

2016 has begun!

[Bees Knees]

I doubt there will be very many blaming Congress cutting their budget for poor IRS service. Most people just assume government agencies are incompetent.

[Corduroy Frog]

Differing Opinion

IRS gains absolutely nothing from the budget cuts. The cuts are the result of Congress punishing them for targeting conservative tax-exempt groups and wasting money making dumb Star Trek videos. That's all. The end result is they have less people to do audits and answer the phone and process paper filed returns. That's it. No mystery. Its typical Congress cutting off their nose to spite their face.

Bees obviously has a different take on these budget cuts, and his may be correct. He may have sources - I certainly don't. Also, I will readily admit that the cynical side of us always looks for a hidden agenda, a dark conspiracy, a sensational cover-up. And those deep, dark things do not always exist. But if he is correct, the "punishment" from Congress is not going to fall upon those guilty, but instead upon the civil service employees trying to do their jobs.

Even if he is correct, or not, I believe the effect on us is the same, and the taxpayers are the ones being hurt. The stoic positions of the IRS will not change due to cuts, they will simply be harder to penetrate. We had best get ready for even poorer response, more mail with return receipt to time-stamp, and educate our clients to the importance of the 90-day letter.