Budget Cuts Could Hinder IRS Processing This Season

Budget Cuts May Hamper IRS Efforts This Tax Season

Budget Cuts
Budget Cuts

Due to budget cuts that have taken place over the past five years, the Internal Revenue Service says that it may take longer to provide service to taxpayers. It may also take the IRS more time to issue refunds as fewer employees may be hired to process returns. In an extreme scenario, the IRS may even be forced to shut-down for several days.

Taxpayers
Taxpayers

The IRS Had Its Budget Slashed $350 Million This Year

Congress slashed the amount of money allocated to running the IRS by $350 million in the past year. In addition, the agency has also had to fund $250 million in government raises and additional benefits given to employees. This effectively put the IRS in a $600 million hole for 2015, which is on top of cuts made during sequestration. Currently, these cuts have meant that the agency has not been able to build an efficient infrastructure to help provide effective service for taxpayers.

It May Be Harder to Get Someone on the Phone

Those who use the Internet are going to find it relatively easy to get the help that they need when filing their taxes. However, there are concerns about how low-income taxpayers, the elderly and others who may not use the Internet are going to get help with questions that they may have. With millions of phone calls coming in each day, there may be significant delays for those who are trying to speak to an actual person about their return.

Hiring Freeze
Hiring Freeze

Hiring and Overtime Freezes Could Make Things Worse

If budget cuts continue, it may be harder for people to get through to IRS representatives or get their refund in a timely manner. This is because the agency may have to put a hiring freeze in place as well as deny overtime to workers. For this tax year, 10,000 to 11,000 seasonal workers have already been hired and are going through the training process. However, the number of seasonal workers hired in future years will depend on whether or not cuts to the budget are restored. Currently, roughly 75 percent of the IRS budget is used to pay for its human resources.

Tax Policy
Tax Policy

Congress Makes Tax Policy

The IRS Commissioner John Koskinen noted that the tax policy is ultimately decided by Congress and not by the IRS itself. However, the commissioner did say that the tax code is extremely bloated and needs to be streamlined immediately. He also mentioned that the lack of enforcement could make it easier for those who cheat or cut corners on their taxes to get away with it.

This Could Lead to People Being Scammed or Committing Fraud

With the tax code being so burdensome, it may be difficult for the average taxpayer to understand what they are sending to the government. This may especially true for those who have been on Obamacare in the past year and took advantage of the advance tax credit. To prevent potential abuse, taxpayers are asked to check into the history of anyone who prepares their taxes. In addition, they are advised to not sign a blank return under any circumstances.

The IRS
The IRS

Free Help May be Available from the IRS

Those who need help may be able to get free assistance from the IRS if they file their personal returns online. They may also be able to get help over the phone from Practitioner Priority Service. While almost anyone may be able to get help, these services are aimed at low-income or disabled individuals. They are also designed to help those who may not be proficient in English.

Could the IRS Actually Shut Down?

While the IRS is not likely to shut-down on a permanent basis, it could be shuttered for a few days per year. While this would likely exacerbate the issue of customer service, it would save the agency $29 million each day it was not open. However, this would likely be a nuclear option that would come into effect only if all other options are exhausted. Mr. Koskinen noted that any moves made could not be done gratuitously and would have to be made with the taxpayer in mind.

The Future
The Future

If future cuts are made to the IRS budget, it could represent a record number of consecutive years in which the budget has been cut. For some, this may seem like a way to keep government in check. However, for many, it may make it harder to submit a proper return or get the tax refund that they are entitled to in a timely manner.

Hopefully, this article got you thinking about streamlining your tax business. With all this in mind, if you’re not already using electronic tax form filing, you may want to consider it. When you efile 1099 and W-2 forms, you’ll typically see results for clients faster than using paper forms.

If you’re running a CPA practice, or even just juggling a few clients as a side revenue stream, this tax season needs to be all about time efficiency. Like most CPAs, you may have clients with employees and sub-contractors serving them.

If you’re spending lots of time printing and routing tax forms, you may want to follow my lead. I’ve been using eFile4Biz.com to file 1099 online, and spending more of my time generating clients, instead of mailing tax forms. These folks are industry leaders, and they connect to the major accounting software brands used by accounting professionals. Watch the video below to see if they’re a good fit for your business.