Outgoing IRS chief warns against cutting too deep

IRS
Cuts at the IRS could delay tax returns. By Joshua Doubek (Own work) [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
Members of Congress can’t honestly say they weren’t warned. Departing IRS chief John Koskinen is telling anyone who will listen that if Congress cuts the agency’s budget too deeply, millions of tax refunds could be delayed.

It’s hard to say, though, whether his warning will be heeded as Congress looks to cut expenses to pay for tax cuts advocated by the GOP.

USA Today reports:

Koskinen, a lightning rod for Capitol Hill criticism and even an impeachment target during his four-year tenure, used his final news conference to issue don’t-say-you-were-never-warned predictions about the potential impact of deep cuts in the IRS’s budget and personnel.

Approximately 64% of the tax agency’s information technology hardware systems “are aged and out of warranty,” said Koskinen. Roughly 22% of the IRS’s software products are “two or more releases behind the industry’s standard, he said. As a result, a technology breakdown “is not a question of whether, simply a question of when,” he warned.

“If this failure were to occur during a filing season, we could be looking at a lengthy interruption in processing returns and issuing refunds,” Koskinen said. “This could have a devastating effect on more than 100 million taxpayers waiting on their refunds, as well as the nation’s economy, which sees some $275 billion in refunds each winter and spring.”

Budget cuts similarly have removed about 20,000 full-time IRS employees since 2010, including 7,300 key enforcement workers, Koskinen said. The tax agency audited fewer than 935,000 individual tax returns in the 2017 fiscal year, the lowest number in 14 years, he said.

 Koskinen also pointed out that voluntary compliance could go down because the IRS is prosecuting fewer cases.
“If people think that many others are not paying their fair share or that they’re not going to get caught if they cheat … our voluntary compliance system will be put at risk,” Koskinen said. “A 1% drop in the compliance rate translates into a (federal government) revenue loss of over $30 billion every year.”
For help in preparing your taxes, contact Sterling Accounting.

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