House of Representatives Cuts IRS’ Budget (Again)

Once again, in June 2015, the House Appropriations Committee cut IRS’ budget.  The Committee cut the current budget by $838 million, and approximately $2.8 billion less than President Obama’s fiscal year 2016 budget proposals.

Under the Committee’s proposal, IRS’ operations program and its modernization programs would be hit by $338 million and $40 million, respectively. IRS’ enforcement programs would take a $538 million haircut.  Wow!  That really hurts.

The Office of Management and Budget argued that IRS’ work in handling identity theft and collecting unpaid tax liabilities would be severely impacted.  The Commissioner of IRS has called for the potential furloughing of non-emergency IRS employees.  And, IRS is unable to replace those employees retiring or otherwise terminating employment.

Colleen M. Kelley,  head of IRS’ union (i.e., the National Treasury Employees Union), claimed she was “deeply saddened” with the House’s devastating cuts making it extremely difficult to provide taxpayer assistance and fulfilling IRS’ mission of enforcing the Internal Revenue Code. The NTEU also pointed out that with the House’s proposed budget cuts the IRS’ budget will fall below its fiscal year 1991 budget when the Internal Revenue Code was less complicated and there were approximately 38 million fewer taxpayers. In the past five years alone, Congress has slashed IRS’ budget by approximately $1.2 billion.  NTEU pointed out that the 2015 tax return filing season was among the worst in IRS’ history—its taxpayer assistance program was only capable of handling fewer than 40 percent of calls from taxpayers requesting assistance. And staffing at IRS offices led to long waits and long lines.

Professionally, I have experienced a decline in IRS’ ability to process timely collection, examination, and investigations thus resulting in unnecessary frustration and stress by clients.  Some argue that it is a blessing not having to be targeted by IRS.  Although this may be true, those clients already targeted will experience long processing, delays in refunds, untoward examinations, and inefficient IRS handling of their tax problems due to these draconian budget cuts.  Those inefficiencies also translate into increased interest assessments, which can be appealed.  Unfortunately, under the Internal Revenue Code, IRS has the option of abating or reducing interest only if it can be shown that IRS unreasonably delayed processing of the case—but there is no guarantee or requirement that IRS abate interest or penalties.

If IRS has assessed penalties or unreasonable interest against you or your business, we can assist by analyzing and recommending an appropriate legal remedy.

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    Howard L. Richshafer

    Howard Richshafer joined Wood + Lamping in 2008, and his practice is focused on civil and criminal tax problems, estate planning and probate, tax court trial work, mergers and acquisitions, and general corporate business matters. Howard is also a licensed Ohio CPA. Over the past 40 years, Howard has represented clients experiencing all types of civil and criminal tax problems with IRS. Those problems include IRS audits, IRS criminal investigations, enforced collection of unpaid tax liabilities involving levies, liens, and seizures of assets and income.

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