Thursday, 20 October 2011

IRS Warns of Poor Services due to Budget Cuts

If the proposed budget cuts for the Internal Revenue Service are implemented, California tax relief lawyers could soon find a reduced quality in the agency’s services.

The budget cuts have not yet taken effect, but the Internal Revenue Service is already cutting down on spending. IRS Commissioner Douglas Shulman has written a letter to lawmakers warning of degradation in taxpayer services and enforcement activities if Congress goes ahead with a plan to cut about $500 million from the Internal Revenue Service budget for the year 2012.

Among the degraded taxpayer services that the Commissioner is concerned about would be consistently busy signals for taxpayers trying to reach the agency. Taxpayers writing letters to the agency may have to wait for as long as five months to hear back. The Internal Revenue Service also warns that it will likely have to fire between 3,000 and 4,000 employees after the budget cuts are implemented. The agency currently has more than 92,000 employees.

Besides, important activities including collection of unpaid taxes and audits could drop by as much as 8%. The drop in such activities will automatically translate into reduced federal revenues and an increased deficit. In fact, the Commissioner expects the revenue loss to federal coffers to reach $4 billion after budget cuts this year.

For the fiscal year ending September 2011, the Internal Revenue Service received $12.1 billion, and the Obama administration asked for a budget of $13.3 billion for 2012. However, the House Appropriations Committee approved $11.5 billion, while the Senate approved an $11.7 billion budget. The final fiscal spending levels for the year 2012 have not yet been set.

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