IRS cuts imperil Collections and Enforcement of Income Tax Laws
Richard Rubin of Bloomberg published a report on September 18, 2013 noting the 9% decrease in IRS collections in fiscal 2012. This decrease in collections of enforcement actions has been due to a decrease in the IRS staffing, policy changes at the IRS, the diversion of manpower to the Accountable Care Act, the decrease in income between 2008 and 2010 because of the decline in the economy, and the one time increases in 2011 caused by the agency’s voluntary disclosure program for undeclared offshore accounts. According to Rubin, 5,000 front-line enforcement division employees were shed between 2010 and 2012. According to the data we gathered from the IRS website, the exams and collections division lost 2,988 personnel (from 44,802 in FY 2010 to 41,814 in FY 2012) or 7%. This cut in manpower exacerbates the effect of the substantial diversion of manpower to administer the Accountable Care Act.
The agency’s Fresh Start initiative also caused a slowdown in collections. This initiative should be abandoned and the manpower reapplied to the collection and auditing of tax returns. Again if you have less money, there is less mission. We need the IRS to collect the monies owed to the Federal government. Starving the IRS is more than counterproductive. It is foolish and the height of stupidity. Edward Karl, VP for taxation at the American Institute of CPAs may have said it best about the IRS. ‘Oversight is appropriate. Effective administration is appropriate. But so is full funding.’
We again recommend adding $3 billion to the IRS budget for FY 2014. That will be returned 4 to 10 fold in additional collections as more audits and other collection activities can be undertaken to shrink our $450 billion tax gap to a more reasonable level.
Harry Pukay-Martin 10/3/2013
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