Attorney Joe Garza on IRS Budget Cuts: Be Careful What You Wish For
From 2005 to 2010, the IRS earned about $14.7 billion annually by conducting audits. By fiscal year 2015, that number had dropped to $7.32 billion because of IRS budget cuts, according to CNBC’s Kevin McCoy.
“Our natural reaction to that kind of statistic is that fewer audits is a good thing,” Attorney Joe Garza said. “The truth is more a mixed bag, though. The lower audit count means the IRS has lost funding and therefore can’t track down corporations and individuals who are breaking the law.”
IRS Commissioner John Koskinen has echoed that sentiment. "No office in this organization has been untouched,” he told USA Today. “What you've got is the lowest level of staffing in 20 years.”
So what’s the verdict? Is a weaker IRS a good thing, or does it actually hurt the American people?
Let’s look at some more facts. Allgov.com reports the following: “The IRS has lost 15,000 workers since 2010, but at the same time, the number of income tax returns filed by individuals went up 3%, to 146 million.” The number of returns goes up while the number of IRS workers goes down---certainly not a logical progression.
While the government is first to feel the effects of IRS budget cuts---it receives only half the revenue it once did from audits---everyday citizens experience the trickle-down effect as well.
Invest-smart.org cites IRS Commissioner John Koskinen: ”Such [budget cuts] have made it nearly impossible for many taxpayers to reach the agency with questions,” Koskinen said. “Fewer than half of the calls placed to the IRS were answered in fiscal [year] 2015, and callers who did get through waited on hold for an average 23 minutes.”
According to CNBC, the number of callers to reach an IRS agent with questions was actually 38%, a sign of unprecedented bad customer service. Service was so bad, in fact, that Congress enacted a recent $290 million increase to improve service to taxpayers.
As things currently stand, less than 1% of taxpayers will face an audit (a historic low), and the IRS doesn’t have the means to enforce corporate tax laws. Since the IRS must now pick and choose audits carefully, millionaires actually stand a higher chance of being audited than in years past.
As we instinctively cheer on the demise of the IRS, though, bear a few things in mind. Without proper enforcement, the issue of corporate tax avoidance will only increase, and individuals who cheat on their tax returns will likely get away with it. Furthermore, you had better not try to call the IRS with important questions---you would have a better chance of getting through the driver’s license line at the DMV quickly.
No one likes the IRS, but no one likes the thought of corporations cheating on taxes either. Furthermore, individuals should be able to rely on IRS customer service when need be. In short, for those hoping for continued IRS budget cuts without a meaningful alternative, be careful what you wish for.