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Federal Eye
Posted at 04:33 PM ET, 10/17/2011

IRS chief: Budget cuts would hurt U.S., taxpayers


(Andrew Harrer - BLOOMBERG)

Davidson

The IRS commissioner has warned Congress that plans to cut the tax collector’s budget would add to the nation’s budget deficit and seriously hurt customer service.

Legislation proposed by Senate appropriations that would slice $525 million from the Internal Revenue Service, and a House bill that would reduce agency spending by $650 million “would lead to noticeable degradation of both service and enforcement and would have a serious detrimental impact on voluntary compliance for years to come,” Commissioner Douglas H. Shulman said in the letter. The IRS budget is about $12.5 billion.

The budget cuts also would force long waits for customer service, he said.

Shulman said that because the IRS workforce accounts for 92 percent of enforcement spending, slashing the IRS budget by the amounts being considered would force substantial cutbacks in front-line IRS staff. The federal government would lose about $4 billion in annual revenue, he said, “or seven times the reduction in IRS budget.”

In other words, Shulman said, “these budget cuts will result in a direct increase to the nation’s deficit.”

Shulman’s letter followed a warning last week from the National Treasury Employees Union, which represents IRS workers, that “a failure to adequately fund the Internal Revenue Service is counterproductive to the best interests of the American people.”

Customer service also would suffer under budget cuts, Shulman said. Responses to taxpayer letters “would be delayed up to five months,” he said, and “approximately half of the nation’s taxpayers attempting to call the IRS would either be unable to get through or hang up in frustration.”

The letter was sent Monday to the Senate Finance Committee, the Senate Appropriations financial services subcommittee and the House Ways and Means Committee, the Ways and Means oversight subcommittee and the House Appropriations financial services subcommittee.

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By  |  04:33 PM ET, 10/17/2011

Categories:  Budget, Congress

 
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