Monday, November 23, 2020

IRSAC Inadequate IRS Funding Is a Threat

The Internal Revenue Service Advisory Council (IRSAC) conveys the public's perception of IRS's activities and plays a significant role as external evaluator regarding the reorganization and its implementation. The Council advises the IRS regarding tax administration policy, programs, and initiatives, and they sees a danger in chronic underfunding of the agency.

IRSAC made the point in its annual report, which also highlighted the importance of the Taxpayer First Act and opportunities to expand the e-filing and online application process.

The 2020 Public Report includes recommendations on 26 issues, which cover a broad range of topics, including:

  • Funding of the IRS
  • The Taxpayer First Act
  • Expansion of e-File
  • Proposal for an early exam program for Large Business
  • Telephone response times for the Practitioner Priority Service
  • Resources for Native American taxpayers and federally recognized tribes
  • Taxpayer Digital Communications

Inadequate IRS funding is a fundamental risk to tax administration. “A tax system rooted in voluntary compliance requires appropriate levels of customer service and enforcement, both of which depend upon adequate and consistent funding,” the report said. “Congressional appropriations provide the vast share of operating funds for the IRS to administer the nation’s tax system, and collect over $3.1 trillion in net revenue.”

In Fiscal Year 2019, More Than 80 Percent of Federal Government Spending Was Funded By
Federal Taxes Collected By The IRS.

Yet “Overall Funding For The IRS Has Decreased Roughly 20 % On An Inflation-Adjusted Basis Since FY2010,”
Added Charles Read, CEO Of GetPayroll In Lewisville, Texas.

“The result of these budget reductions since FY 2010 is a 22 percent decline in the number of employees at the agency and a 30 percent decline in the number of employees working in enforcement roles.”

Among IRSAC’s recommendations are advocacy for funding at a level no lower than the FY2010 benchmark adjusted for inflation, or $14.3 billion, or at minimum a level that will provide for a net increase in staffing on a sustained yearly basis; and advocating for consistent or multi-year funding for long-term initiatives, including the customer service strategy, training strategy and business modernization plan.

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1 comment:

  1. IRS commissioner calls on Congress to provide consistent funding

    IRS Commissioner Charles Rettig, during Nov. 20 testimony before the House Ways and Means Committee oversight panel, stressed the importance of Congress consistently providing multi-year funding for the agency.

    He buttressed his remarks by noting that in fiscal year 2019, the agency collected $3.56 trillion in taxes and generated almost 96% of the funding that supports the federal government's operations.

    Plans are well underway for the launch of the 2021 filing season, Rettig said. With this in mind, he noted that IRS will continue operating under its current posture until further notice.

    "For the majority of employees who have portable work and have been performing their duties at home, they will continue to do so," Rettig said, adding that "those employees recalled to the office will continue to work in that capacity."

    He had special words directed towards tax professionals. "We will continue to do everything we can to help them with their important work assisting taxpayers," Rettig said. "As part of these efforts, the IRS continues to find ways to provide virtual services for practitioners wherever possible to ensure the critical work of the agency continues," he explained.

    Traditionally, IRS announces the opening of the individual filing season in January once the agency has completed development, programming, testing and coordinating with industry partners.

    "We are currently following this process and will, as in the past, be able to determine a filing season opening date in due course," Rettig said. "Work is ongoing and our teams are continuing to hit key milestones in the process," he added. To support both tax professionals and taxpayers, IRS is currently preparing for its annual "Get Ready" outreach campaign, Rettig said.