Happy holidays! Cut the IRS budget!

Blackswan writes:

Deadbeats’ Christmas gift wish may actually be happening this year. According to the IRS commissioner, Congress might have shot itself in the foot this time by reducing the IRS’s budget by $500 million next year.
In a letter sent to Congress last week, IRS commissioner Douglas Shulman wrote that if Congress reduces the IRS’s budget by half a billion dollars next year, the agency will experience a “noticeable degradation” of services, including audits and efforts to collect unpaid taxes.  Such a reduction, he added, would lead to a 5% to 8% decrease in collection efforts, including audits, which would reduce revenue by about $4 billion.

Taxpayers would also be negatively affected by this reduction. Reduced personnel will result in a busy signal for more than half of the taxpayers who call the agency for help – many will simply “hang up in frustration” the commissioner contended. Additionally, a response to taxpayers trying to resolve accounting issues could be delayed up to five months, and would also limit small businesses’ ability to reach the agency in order to work out a payment plan.

While the proposed cuts have not been approved yet, tax experts believe that the cuts will most likely be approved by the president as the federal government tries to reduce its deficit.
I think it sounds counter-intuitive to take away funds from the one government agency that has the potential to bring in more money. Additionally, being government employees, none of the IRS agents will work more than 37.5 hrs during tax season (unlike public accountants who will work 80 hrs. a week during that time), so it’s not like two employees will work 60 hrs. each in order to make up for one being fired. What do you guys think?



About Mark P. Holtzman

Chair of Accounting Department at Seton Hall University. PhD from The University of Texas at Austin. Worked at Deloitte's New York Office. BSBA from Hofstra University.


  1. It would be trite to say 'penny wise pound foolish' so I won't 😉

  2. I do not believe the IRS could ever be so financially strapped that it cannot afford to collect its debt. The most that will happen is, this agency will collect its dues at a later date – before the 10 years statute of limitation for collecting debt expires. As for customers' inquiries, I am sure the IRS will have some system in place – maybe automated to address queries and to collect and process info on tax payers.

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