The National Taxpayer Advocate released its 2013 Annual Report to Congress today, in a flashier and more public-facing package than I remember it using in the past.
The report identifies how funding cuts, increased responsibility, and Congressional hostility to the agency have put the IRS in something of a crisis state:
Throughout the Most Serious Problems section of this report, we recount the ways in which chronic underfunding drives the agency to develop short-term solutions that merely patch over problems and impose unnecessary burden and even harm on taxpayers. These short-term solutions also create more work for the IRS in the end…
Agency budget woes are a theme that runs through the document, and this is highlighted as its own “Most Serious Problem” — “The IRS Desperately Needs More Funding to Serve [sic] Taxpayers and Increase Voluntary [sic] Compliance.”
That problem statement describes the funding crunch this way: “Since , the IRS budget has been cut by nearly eight percent. Over the same period, inflation has risen by about six percent, further eroding the IRS’s resources.” Meanwhile: “the workload of the IRS has increased significantly.”
This has led the agency to cut way back in what it calls taxpayer service (responding to phone calls and letters, providing walk-in consultation, answering questions about tax laws and regulations). It has reduced its staff by 8% in recent years (including 12% and 21% reductions in its number of Revenue Agents and Revenue Officers respectively), and slashed its training budget by 87%.
The Taxpayer Advocate notes that this is likely to lead to reduced tax collection, and that this will largely be not because a lack of enforcement personnel means that more tax evaders will get through the net, but because poor “customer service” and increasing IRS clumsiness will make the mass of compliant taxpayers more cynical about taxpaying and more likely to try to get away with something.
Some preliminary numbers on liens and levies are embedded in the report, so I can update my charts: