How The Tax Changes Will Affect The IRS And You
Tax law changes will further stress out the already “broken” IRS.
The White House is saying “snip, snip” to the IRS’s budget this year, but not for the first time. The agency’s allowance has been cut by 20 percent in just seven years, even though it collects $4 for every $1 spent. Some Americans may be celebrating, expecting a seemingly less stressful tax year, but a slashed IRS means things like less funding for our nation’s many government programs, a wider tax gap, and more problems for everyday Americans who answer to Uncle Sam.
Here are six repercussions the IRS budget cuts have on taxpayers:
1. A slower (and downright miserable) customer experience – Call the IRS and you’ll likely sit on hold for over 30 minutes listening to Muzak. Due to staffing cuts over the years, the IRS doesn’t have the resources to provide efficient service for its overwhelming number of callers – both on and off tax season. Not only that, but many representatives who are answering calls are less equipped to deal with your issues quickly due to lack of training.
2. Fewer, less experienced, or even unethical representatives – An understaffed IRS does more than just hold up customer service lines – it delays Revenue Officer case assignment and adds to the timeline in which you resolve your tax debt. To fill the talent gap, the IRS rehired over 200 employees that have been fired for unethical behavior, like fraud, theft, and even taxpayer data abuse. The people you are supposed to trust could be a danger to your financial life.
3. Clunky and unsafe service-automation processes – Fewer humans means more robots. And for the IRS, the robots don’t quite measure up. For example, taxpayers have the right to appeal an IRS decision with a local Appeals or Settlement Officer, but 12 states are without any qualified local appeals staff. To discourage in-person appeals, the IRS has released a telecommunication system within its centralized appeal office. Non-local Officers understand less about local businesses’ challenges, are out of tune with regional issues and are lower-ranked employees who lack expertise and experience.
The IRS believes that technology can replace the local expertise at a lower cost, but this hasn’t yet shown true. In fact, visits to the IRS website decreased by 4.1 percent despite the push for more online services (enough to make that 30+ minutes on hold sound tempting). This combination of a limited local presence and a poor attempt at replacement with technology ultimately leaves taxpayers who need help out to dry.
4. A lack of taxpayer outreach and education – You may think the government is a pro when it comes to confusing the public about taxes, but the IRS wants you to be informed about (and comply with) tax law. Unfortunately, taxpayers are left in the dark due to lack of awareness and education when only four percent of the “Taxpayer Services” budget goes to working with organizations such as state tax authorities and volunteer groups (most of this budget goes to processing returns). More cuts will continue to widen the gap of outreach and support.
5. More scams and ID theft – Financial scams involving sensitive personal data are everyone’s worst nightmare. If the IRS can’t provide adequate education and awareness of how to mitigate these risks, fraudulent activity increases. Ignorance isn’t the only loophole – confidential data can be easily compromised to do a lack of sufficient infrastructure and technology. The IRS has made significant gains over the past few years, but maintaining the progress may become difficult with less financial support.
6. Debt collection from private companies – Congress recently ruled (again) that a portion of debt collection would be outsourced to private debt collectors (PDCs) – an approach that comes with its own set of issues. For one, a sizable percentage of government funding (25 percent) money now goes to PDCs instead of government programs. When prior private debt collection programs have proven to cost more than the government makes, it’s lose-lose for Uncle Sam and citizens. Taxpayers need to protect themselves and stay informed more than ever.
For people who have tax debt, these six issues aren’t making the already-difficult process any easier. Luckily, tax professionals can deal with the IRS on your behalf (so you can say “sayonara” to long hold times). If you have questions about individual or small business IRS issues, call Richard Schickel at 520-448-3531 for a free consultation at.