Two enforcement initiatives have been put on hold because of budget cuts: A planned project to match sales income reported on 1099-K forms with sums listed on business returns. Also, an electronic review program to sniff out fraudulent returns. And the agency is suffering brain drain as experienced examiners retire and rookies replace them. With training budgets cut, it’s harder to get them up to speed on complex tax issues…foreign business activities, multiple pass-through entities, etc. It’s also pared back on important services relied upon by filers and preparers. Long wait times when calling the IRS are now the norm, not the exception.
The agency isn’t answering any tax law questions from taxpayers. Instead, the Service is directing callers to find the answers themselves in IRS publications or on its Web site. In addition, tax professionals who call the practitioner priority line
can get assistance only on account issues for their clients and not with legal inquiries. IRS is way behind on answering correspondence from taxpayers. Last year, it responded timely to fewer than half of taxpayers who protested adjustments. Also, because of the agency’s significant delays in processing incoming mail from taxpayers, many filers who sent in documentation that a tax bill was erroneous keep getting billed.
The Service will issue fewer rulings to taxpayers this year…down by 10%.
It no longer offers free walk-in tax preparation assistance at its offices. And it has shuttered two electronic services used by tax professionals: The Disclosure Authorization and the Electronic Account Resolution applications. Don’t expect IRS to come roaring back anytime soon. Fiscal austerity will be the norm for the near term as Congress keeps a tight grip on the purse strings.