By Allyn Hughes, CFP®, ChFC®, CLU®, CAP®
The Omnibus Tax bill that passed at the end of 2015 gave a small increase of $290 million to the IRS’s budget for 2016. This increase is supposed to be used only to “improve customer service, (fight) identify theft and cybersecurity.”
As you may remember, many Republicans have tried to cut the budget of the IRS because they feel that the IRS mishandled the applications for tax-exempt (501c-3) status. They ended up cutting the IRS budget from $12.1 billion in fiscal year 2010 to $11.3 billion in 2013.
As a result of these cuts:
- The IRS couldn’t answer nearly 40% of its phone calls with wait times of up to 30 minutes last year,
- It has 10,000 fewer employees,
- It has sent out billions of dollars in fraudulent tax payments because it does not have a system to check for fraudulent returns, and
- Collections have shrunk by $8 billion, according to a review of government documents.
At the same time, the IRS has to implement many of the changes to the healthcare law.
Many years ago I was the victim of identity theft. As a result, the IRS sends me a PIN once a year that I have to use to confirm my identification on my tax return. I received my PIN for my 2015 taxes in the mail this weekend. The PIN is new, but the form that it was sent on said that this PIN is only good for my 2014 tax return which I filed last April. I wonder if I will receive another mailing saying that they screwed up …
Hopefully they will spend the $290 billion quickly and responsibly. The IRS has to get better.