Sequester could hurt federal tax collections, IRS says

 

The head of the Internal Revenue Service is warning that the government-wide spending cuts that took effect last month could hurt federal tax collections.

IRS Acting Commissioner Steven Miller said during testimony on Thursday before a House Ways and Means subcommittee that the so-called sequester could reduce the amount of enforcement revenue the agency brings to federal coffers, although he did not provide a dollar amount.

(Susan Walsh/AP)
(Susan Walsh/AP)

IRS enforcement activities netted more than $50 billion in 2012 and avoided more than $20 billion in payments related to fraudulent returns, according to the agency’s estimates.

The IRS has told lawmakers it could miss out on “billions of dollars” in potential collections because of the cuts, according to Rep. Jose Serrano (D-N.Y.), who spoke about the issue on Thursday during a House Appropriations subcommittee hearing.

The sequester requires the IRS to reduce its spending by $600 million this fiscal year. President Obama’s 2014 budget calls for ending the sequester and boosting the IRS budget, which has stood at $11.8 billion for the past two years, by $1 billion.

The IRS has had problems collecting revenue even without the sequester. An inspector general’s report released this week said the agency issued more than $11 billion in faulty refunds last year to taxpayers who filed for the Earned Income Tax Credit.

For more federal news, visit The Federal Eye, The Fed Page and Post Politics.

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Josh Hicks covers the federal government and anchors the Federal Eye blog. He reported for newspapers in the Detroit and Seattle suburbs before joining the Post as a contributor to Glenn Kessler’s Fact Checker blog in 2011.
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Josh Hicks · April 26, 2013