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Tuesday July 22, 2014

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Budget Bill Cuts IRS Funding

On January 15 the House passed the Consolidated Appropriations Act of 2014 (H.R. 3547) by a vote of 359 to 67. The following day the Senate passed the bill with a 72-26 vote. The budget compromise sets total discretionary spending for fiscal year 2014 at $1.01 trillion. It largely maintains the budget levels created under the sequestration rules.

The IRS budget is increased from $11.2 billion under the sequestration plan to $11.3 billion. This is still a decrease of $526 million from the fiscal year 2013 levels.

The budget sets aside $92 million "solely to improve the delivery of services to taxpayers, to improve the identification and prevention of refund fraud and identity theft, and to address international and offshore compliance issues." The increase in the IRS budget is created in response to a report by National Taxpayer Advocate Nina Olsen. She noted that the underfunding of the IRS is creating major taxpayer support problems. Only 61% of calls from taxpayers were answered by the IRS this past year. Approximately 20 million taxpayers called but were unable to speak to a representative.

With the increased call volume and fewer IRS representatives, the waiting time on calls increased from 2.6 minutes in 2003 to 17.6 minutes in 2013. Finally, there was a reduction in IRS training budgets from $172 million in 2010 to $22 million in 2013. During this same period of time, the IRS processing of returns grew by 4% to 131,400,000 tax returns.

Published January 17, 2014

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