Budget Cuts at the IRS

A recent story on NPR highlights the problems at the IRS resulting from reduced budgets and increased tax filing activities.  The story is about a report produced by the Taxpayer Advocate which is issued each year and serves as a report card for the IRS.  The Taxpayer Advocate was critical of the IRS service levels and of the reduced budget.

The IRS is expected to receive over 100 million phone calls in 2015 and, apparently, the IRS is only expecting to be able to answer about half of those calls and the hold time is expected to be about 30 minutes.   The IRS I can speak from experience here that phone calls with the IRS often get disconnected after, sometimes, a much longer period than 30 minutes.  I usually budget at least an hour to get through to the IRS (and I plan to use the time for other work so I don’t have to bill clients for hold time).  If you call on your own, plan to be on hold for a while.

The IRS is expected to receive more than 130 million tax returns despite an inflation adjusted 17% reduction in its budget.  The good news is that the chance for an audit is reduced but the bad news is that everything is going to take longer.  It already takes 4-6 weeks for a tax return to be processed and it can take 6-9 months for the IRS to receive and respond to an Offer in Compromise.

Overall, taxpayers can expect slower service from the IRS.  It has never been easy or efficient to deal with the IRS but, in a time of reduced budgets for the agency and increasing returns to deal with, it looks like it will continue to deteriorate.