IRS Raking It In Despite Budget Cuts

By Taxes FOXBusiness

Internal Revenue Service Commissioner John Koskinen has repeatedly warned Congress that cuts to his budget would hurt the agency’s service levels as well as its ability to protect taxpayers from fraud. Earlier this year he told a Congressional panel that the $1.2 billion cut in his budget since 2015 will also cut tax revenues. 

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“We estimate the agency will lose through attrition about 1,800 key enforcement personnel during fiscal year of 2015 that we will not be able to replace. We anticipate the outcome will be fewer audits and fewer resources focused on collection. We estimate that as a result of enforcement cuts the government will lose at least $2 billion in revenue,” the commissioner told Congress in March.  He repeated some of his remarks in a speech to the National Press Club in March. 

However, the loss of revenue has been only a fraction of what Koskinen estimated, according to a report from the Treasury Inspector General for Tax Administration. That report states that from fiscal 2010 to 2014 collections from the tax agency’s 400 field offices has fallen by $100 million, while automated collections have fallen another $100 million. That’s a $200 million loss in revenue, a fraction of what Koskinen predicted and interestingly those losses were much less than the reduction in head count in those departments which totaled 25% and 28% respectively.

Federal tax revenues overall, meanwhile, continue to set new records. According to a recent Treasury report, federal tax revenues are on pace to total $2.1 trillion this year. The balance of tax revenues comes from the 98% of Americans who willingly pay their taxes without enforcement measures against them. 

Nina Olsen, of The Taxpayer Advocate Service, has said that the effort to lift collections would be even higher if the IRS focused its efforts on assisting taxpayers who want to pay rather than focusing on scofflaws.  

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