Director of Federal Tax Policy
The President’s fiscal year 2016 budget would reverse a large share of the Internal Revenue Service (IRS) funding cuts of recent years, which have shrunk overall IRS funding as well as funding to enforce the nation’s tax laws by nearly one-fifth. While the boost would still leave IRS funding 5 percent below 2010 levels, after adjusting for inflation, it would restore cuts to taxpayer services and bolster efforts to go after tax cheats.
The IRS performs a vital function — collecting the revenue that pays soldiers’ salaries, provides medical care for the elderly, and meets the many other financial commitments Congress has made. Repeated funding cuts undermine its ability to do its job.
The early signs of how funding cuts have weakened the agency this filing season are disturbing. To cite just one example: over half of taxpayer calls to the IRS this year will go unanswered, National Taxpayer Advocate Nina Olson estimates, and those who get through will wait an average of 30 minutes.
Also, reports from the Treasury Department Inspector General for Tax Administration and Government Accountability Office have made it clear that underfunding the IRS hurts honest taxpayers.
Because the U.S tax system relies on taxpayers to report their income and pay the appropriate tax, it depends on a high degree of trust between taxpayers and government that has lasted many, many decades. The declines in taxpayer services and enforcement resulting from budget cuts weaken that trust and could corrode compliance over time. An example of how the cuts are beginning to seep into mainstream culture is a recent Bloomberg story headlined “2015 Is the Best Year Yet to Cheat on Your Taxes: Budget cuts at the IRS mean longer phone waits — and fewer audits.”
The President’s budget recognizes the serious stakes at hand and restores a significant share of those cuts.