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Koskinen Warns Of IRS Budget Squeeze Effects

by Mike Godfrey, Tax-News.com, Washington

23 December 2014


Internal Revenue Service Commissioner John Koskinen has repeated warnings that, as well as a further curtailment to taxpayer services next year, the further reduction in the agency's Budget for 2015 will also affect the filing season due to start in February.

The IRS has already expressed concern that IRS's work during 2015 will be deleteriously affected by the USD345m cut in its budget to USD10.9bn, which is bound to affect its enforcement actions – for example, against identity and tax refund fraud, and improper payments on tax credit refunds.

Koskinen has now also confirmed the budget reduction will mean a hiring freeze and a cancellation of payments for overtime for the agency's employees. In press comments, he has even suggested that, although a last resort, the IRS may have to organize its own shutdowns on certain days in order to save funds.

However, he has indicated that the 2015 filing season, due to begin in mid-January, is unlikely to be delayed. The problem that could have been caused by the late renewal of the "tax extenders" package has been dissipated somewhat by their renewal as a whole, without significant changes.

On the other hand, Koskinen has also said that the new filing season will be "complex," particularly due to the extra administrative complications caused by the substantial new tax provisions in the Affordable Care Act. He has therefore warned that the pressure on IRS employees' time, caused also by the reduced overtime, will mean that there will be a delay in processing taxpayers' refunds.

With regard to current tax filing complexities, the IRS has opened a new website to provide individual taxpayers with new options to get information and tips on selecting the right type of qualified tax help, including a new gateway page with links to national non-profit tax professional groups.

"The tax return represents one of the biggest financial transactions of the year for many Americans, whether they are getting a refund or paying a tax bill," added Koskinen. "Filling out tax returns accurately is critically important. Between tax law changes and tax scams circulating, it's more important than ever for people who need professional assistance to select wisely and carefully."

As more than 140m tax returns were filed last year, with more than half being prepared with the help of a paid return preparer, Koskinen noted that "tax professionals are a vital link with American taxpayers, and without them we could not run the nation's tax system."

TAGS: individuals | compliance | tax | tax compliance | law | budget | tax credits | Internal Revenue Service (IRS) | enforcement | tax authority | professionals | United States | tax breaks | individual income tax | services

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