IRS Budget Cuts – the Results Will Surprise You.

We’ve reported several times in the past about the ongoing cuts to the IRS budget – now at just under $11 Billion. A new report released earlier this month by the Treasury Inspector General for Tax Administration shows the surprising results. Topping the list is the fact that tax revenue collection is UP – that’s right, HIGHER than in year’s past. Here are the highlights.

  • 2015 overall Tax Collection was $3.3 trillion, INCREASED 8% from Fiscal 2014.
  • Collection from enforcement (liens, seizures, etc.) DECREASED 5% from 2014 levels (from $57.1 billion in 2014 to $54.2 billion in 2015).
  • IRS collection functions ALL showed INCREASES, except IRS Field Collections (the agents ringing your doorbell and asking for money). Makes you wonder if field collection agents are really a cost-effective approach to tax collection.
  • Enforcement actions DECREASED in 2015 over prior years.
  • Examinations DECREASED in 2015 (field exams were down 28% over 2011) – The report indicates that this is directly related to a decrease of 24% in IRS Agents in these areas.
  • The “no-change” rate for revenue agent examinations INCREASED for business returns and DECREASED for individual returns (further reason to use a business entity where appropriate).

So my take on this is that less money has required the IRS to become more efficient and instead of hassling taxpayers more, focus on things that actually work.

Overall, it’s going to be very difficult for the IRS to claim it needs more money to collect the nation’s taxes. And I’d suggest that further budget reductions may provide even more reason for the IRS to get its house in order and improve operations that are now sagging (and possibly crumbling) under the weight of decades of bureaucratic waste.

If you need help with a tax issue, contact out office to schedule your free consultation. Call (480) 888-7111 to speak with one of our friendly team members and get started today