Article originally published on Forbes.com by Kelly Phillips Erb - 10/26/2011
The details aren’t all that important. Basically, I called the IRS to discuss a client’s tax matter. While it’s my job to zealously protect the rights of my clients, I am very aware that the person on the end of the line is also doing their job, and as such, I am professional when I speak to the IRS. On this day, I did exactly that. I didn’t raise my voice. I wasn’t nasty. I merely tried to explain that there appeared to have been a cross in communications when the agent cut in abruptly with a brusque “This is how we do it” and then, Click.
I was actually rendered speechless. If you’ve met me, you’ll understand that’s quite the feat.
I called back, only to find that there is no way to speak to a supervisor without putting in a special request. I did exactly that – and I’m still waiting.
It was the first of a number of incidents that I would have previously considered to be out of character for IRS. Shocked by what appeared to be a change of direction from the “kinder, gentler IRS” in the 90s, I asked my colleagues on twitter whether they had noticed a difference in the IRS treatment of taxpayers. The answer was a resounding yes.
I was inundated by direct messages and emails from accountants and attorneys, each with an anecdote about a client matter with IRS recently gone bad. Clients have been liened without notice to their representatives. Installment plans were canceled without warning or explanation. Reconsideration requests were summarily denied. The word “abuse” in reference to IRS popped up more than once.
I know, some of you are going to say that you’re not surprised. But I am. While I understand that IRS is rarely anyone’s best friend, it has always been my experience that while the bureaucracy and policies can be frustrating, most of the agents and attorneys that I’ve worked with have been helpful (one sexist Innocent Spouse Appeals Officer from 2004 excepted) – even when I don’t agree with the result.
That’s why this latest smattering of incidents is disconcerting to say the least. And if you believe the IRS, it’s about to get worse.
As part of the overall spending reduction plan for the federal government, Congress is slashing the budget for IRS – at the same time that Congress is pressuring IRS to ramp up its compliance and collections efforts. That kind of pressure is likely the tipping point for an already thinly stretched agency. The result, according to IRS Commissioner Doug Shulman, will be a loss in services to taxpayers and a resulting dip in revenue – to the tune of $4 billion per year.
Shulman issued a letter to lawmakers (downloads as pdf) in which he warned that such cuts “would lead to noticeable degradation of both service and enforcement” as well as lead to “a serious detrimental impact on voluntary compliance for years to come.”
Shulman went on to point out that the lion’s share of the IRS budget – a whopping 92% – was directed towards labor. That necessarily means that cuts to the budget means cuts to staffing. The result, Shulman explained, would be that letters sent to the IRS would take up to 5 months longer to be answered; about half of the telephone calls made to the IRS would not even be answered (that’s significantly less than the current 70% answer rate).
This, Shulman notes, is a particular concern due to a flurry of new legislation which will require more IRS attention. This includes reporting requirements relating to credit cards and third party payment processors and new cost basis reporting rules – both of which went into effect in 2011 and will be a key factor in the 2012 tax season. Shulman didn’t even address increased compliance and regulatory matters as a result of the new health care plan, an administrative burden that already concerns National Taxpayer Advocate Nina Olson.
So far, Congress hasn’t blinked, taking the position that IRS will simply have to cope. Specifically, Rep. Jo Ann Emerson (R-MO) has said, “Like families across the country, the IRS will have to do more with less.” Hmm. That makes me wonder what Congress is giving up… Besides common sense, that is.
In the meantime, I worry for taxpayers. The trend towards a short-tempered, overburdened and possibly unsupervised workforce at IRS cannot bode well for compliance efforts; frustrated and scared taxpayers tend to hide from IRS at the best of times. Making it more difficult to get help will only make that worse.
Even more worrisome, the turnabout is quite sudden: budget cuts are already being contemplated for as soon as mid-November 2011. With the 2012 tax season just a few months out, I fear the IRS has already been forced to sharpen their knives.
Article originally published on Forbes.com by Kelly Phillips Erb - 10/26/2011
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