The IRS is unlikely to win a popularity contest any time soon. Taxpayers of all income levels, occupations, and political ideals generally are able to unite around their shared dislike for the IRS.
The IRS is unlikely to win a popularity contest any time soon. Taxpayers of all income levels, occupations, and political ideals generally are able to unite around their shared dislike for the IRS.
As a result, politicians in congress are constantly under pressure to slash the IRS budget. And in recent years, that is exactly what has happened.
This represents a mixed bag for taxpayers, however. On one hand, a lower operating budget means less resources for the IRS to devote to collecting revenue from taxpayers. On the other hand, a reduced budget means that the IRS is also devoting less resources to assisting taxpayers. If you’ve tried to get an agent on the phone to ask a simple question, chances are that you’ve experienced extremely high wait times, if you were able to get through to begin with.
A recent ABC News article reports on the impact of the IRS budget cuts:
Budget cuts and new responsibilities are straining the Internal Revenue Service's ability to police tax returns. This year, the IRS will have fewer agents auditing returns than at any time since at least the 1980s.
Taxpayer services are suffering, too, with millions of phone calls to the IRS going unanswered.
"We keep going after the people who look like the worst of the bad guys," IRS Commissioner John Koskinen said in an interview. "But there are going to be some people that we should catch, either in terms of collecting the revenue from them or prosecuting them, that we're not going to catch."
Better technology is helping to offset some budget cuts.
If you report making $40,000 in wages and your employer tells the IRS you made $50,000, the agency's computers probably will catch that. The same is true for investment income and many common deductions that are reported to the IRS by financial institutions.
But if you operate a business that deals in cash, with income or expenses that are not independently reported to the IRS, your chances of getting caught are lower than they have been in years.
Last year, the IRS audited less than 1 percent of all returns from individuals, the lowest rate since 2005. This year, Koskinen said, "The numbers will go down."
Koskinen was confirmed as IRS commissioner in December. He took over an agency under siege on several fronts.
Most taxpayers would agree that a reduction in IRS audit levels is a good thing. It’s important to understand, however, that audits will still take place, and that many of them will be conducted at random – so attempting to get away with tax fraud is still a bad idea.
What’s more, while overall audit levels may be down, if you’re unfortunate enough to be stuck in an IRS dispute, you’ll still have to face the full fury of the agency. The good news is that we can help. If you’re facing an IRS audit or a tax dispute, don’t delay. Get in touch with us immediately and let us take on the IRS on your behalf… so that you can get back to enjoying your life!