The AICPA recognizes that the IRS’s budget is often the subject of debate (particularly given the recent allegations concerning the handling of certain taxpayer matters and travel expenses). Not surprisingly, IRS operations and its budget are also highly politicized, and particularly so this year because of those allegations. Nonetheless, the AICPA’s position is that Congress should properly fund the agency for the sake of taxpayers as well as tax practitioners.
The author has received the impression from speaking with scores of tax practitioners that no one needs the IRS, until they need them. The title of a Cinderella song from the ’80s, “Don’t Know What You Got (Till It’s Gone),” may reflect this somewhat underrealized dependence on the IRS. This column does not contend that the IRS is flawless. Nonetheless, continued funding of the agency is essential to the success of the nation’s voluntary system.
“[W]e believe that proper funding of the IRS’s budget is essential to the IRS’s ability to carry out its mission,” Jeffrey A. Porter, chair of the AICPA’s Tax Executive Committee, wrote in a letter to the Senate Appropriations Subcommittee on Financial Services and General Government. “The collection of tax revenues and the administration of tax laws, as well as the need to provide assistance to taxpayers and tax practitioners, are important responsibilities.” (The letter, dated Sept. 4, 2013, is available here.)
However, the IRS’s budget has been severely challenged in recent years. The IRS budget was approximately $11.8 billion in FY 2012, down from approximately $12.1 billion in FY 2011. The challenge for the IRS is even more dramatic, as the approximately $5.3 billion enforcement budget it received for FY 2012 was reduced by approximately $200 million from the prior year.
The AICPA is concerned that a further reduction in taxpayer service resources would negatively impact taxpayers and AICPA members alike. Specifically, there are concerns that another decrease in the IRS’s budget would likely (1) increase wait times for incoming telephone calls from taxpayers and tax practitioners; (2) create excessive delays in responding to taxpayers’ written inquiries and responses to IRS notices; (3) lead to the inability of IRS staff to meet and assist with the needs of taxpayers who visit walk-in taxpayer assistance centers; (4) result in the failure to keep taxpayers informed of tax law changes (via customer outreach, printed and online materials, webcasts, etc.); (5) exacerbate the problem of excessive delays in the issuance of administrative guidance; and (6) slow down the release and update of tax forms.
AICPA members frequently contact the Institute’s advocacy staff—some urging that the IRS’s budget be protected, others inquiring whether the Institute’s involvement regarding the Service’s budget is even appropriate. However, given the drastic consequences that could result from insufficient funding, some of which are outlined above, the Tax Executive Committee believes the Institute must make its voice heard. In other words, the AICPA takes its role as an advocate for a well-functioning tax system seriously.
Tax practitioners are unquestionably aware of the consequences of a government shutdown. During such extraordinary circumstances, taxpayers and practitioners cannot turn to the IRS for assistance. They are unable to address issues such as obtaining individual taxpayer identification numbers (ITINs); requesting copies of prior-year returns, wage and income transcripts, or general account transcripts; completing required forms and schedules; and getting answers to general tax questions.
The IRS has made progress in technology that allows many services to continue operating during a government shutdown. However, even with the availability of e-filing, internet-based tools, and e-Services for tax professionals, there remains a need in many instances to obtain live assistance from a person. Taxpayers and tax practitioners, even if grudgingly, still rely on the agency for many services.
Lack of Qualified and Experienced Employees
The Institute is hearing from more and more members about how the experienced employees at the IRS are retiring in droves, only to be replaced by inexperienced, inadequately trained employees who do not know how to properly access, interpret, or apply tax law. The lack of resources contributes to this problem, but it is an understandable frustration, nevertheless.
Unfortunately, the IRS must contend with an aging workforce, as does every other sector of the nation’s economy. The agency may continue to lose its most experienced staff to retirement. Nonetheless, it is crucial that IRS employees are properly trained and kept up to date on ever-changing tax laws. There is no quick fix for this widespread problem. However, perhaps a long-term investment in the agency (through proper funding of its budget) is a necessary step in the right direction.
For the benefit of all taxpayers and tax practitioners, it may be in everyone’s best interests to consider a well-funded IRS a valuable ally.
Melissa Labant is the AICPA director of Tax Advocacy and Professional Standards in Washington, D.C. For more information about this column, contact Ms. Labant at email@example.com.