Acting IRS Commissioner Steven T. Miller told the House Appropriations Subcommittee on Financial Services and General Government on April 9 that the Service has already processed 88-million individual tax returns and provided 72-million refunds for a total of $202 billion. The Service’s work has been complicated by the enactment of major tax law changes in January, but its performance will worsen due to budget sequestration cuts in the Budget Control Act of 2011 (P.L. 112-25 ).
Miller said future service and enforcement levels will reflect a more austere fiscal environment. He predicted that the Service’s ability to answer calls and conduct exams will be eroded and that taxpayers may begin to worry less about facing an audit. The IRS will close seven days in 2013, with the first day scheduled around the Memorial Day holiday, he reported. Miller could not estimate how much the sequestration cuts would impact the actual dollar amount of taxes collected.
The Service’s budget has been reduced by $1 billion since 2012, or about 8 percent, despite the increased responsibilities from combating identity theft and implementing the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148 ) and new Foreign Account Tax Compliance Act rules, enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act of 2010 (P.L. 111-147 ), Miller said. “We are currently running nearly 10,000 employees below where we were during the 2010 filing season,” he stated.
Subcommittee Chairman Ander Crenshaw, R-Fla., acknowledged that the Service is facing difficult financial pressure, but it appears to have planned well for working under tighter budgets. “You’re actually forced, because of these across-the-board cuts, forced to make some tough decisions, maybe to be more efficient,” Crenshaw said. Miller responded that several internal efforts, including a hiring freeze, has allowed the Service to shift resources to addressing identity theft.
With respect to implementing the PPACA , Miller told Crenshaw that the Service will be ready to process health care information from the exchanges and insurance firms. Most of the public will be required to check a box on their tax return affirming that they have insurance. Returns must also reflect if taxpayers are claiming a credit or receiving a subsidy.
By Stephen K. Cooper, CCH News Staff