APA Asks Congress to Protect Taxpayers, Increase IRS Funding
Original article written by Alice P. Jacobsohn, Esq., American Payroll Association
The American Payroll Association (APA) sent a letter to Congress in August urging adequate funding for the IRS. The IRS plays an important role in the daily workload of payroll professionals. Therefore, ensuring the agency is properly funded to respond to questions, information requests, and comments on proposals is a vital activity for the APA.
APA identifies two key reasons why the IRS requires sufficient funding: closing the tax gap and protecting taxpayer information while preventing identity theft. Congress reduced the IRS’ budget down to 1991 levels with an 18% cut since 2010. The result is a lack of responsiveness to taxpayers. Customers wait on the telephone for up to 28 minutes, and only 60% of the calls are answered by the IRS. The funding proposed by Congress in Senate Bill 1910 adds $90 million for correspondence and identity theft prevention, but this will just bring the IRS to basic service levels.
“APA members and other taxpayers deserve more than basic services,” APA wrote. “They should have the federal agency identified in the IRS’ Taxpayer Bill of Rights that keeps them informed of tax laws and provides quality service, including prompt, courteous, and professional assistance.”
The APA offered a perspective on enforcement as a parity issue for members who take their responsibility for paying taxes seriously.
“According to U.S. Office of Management and Budget Director Shaun Donovan, for every $1 spent by the IRS on enforcement, $4 are returned in revenue. Budget cuts are hampering the IRS’ capability to take enforcement actions. Expected estimates show a $7 to $8 billion reduction from fiscal year 2010 numbers in enforcement revenue. These are tax dollars already owed that go uncollected because the IRS lacks the resources to track down tax evaders. This also raises a fairness issue for taxpayers who pay their required taxes on time.”
For APA members, sufficient IRS funding for enforcement levels the playing field by ensuring competitors not only pay their taxes, but the same administrative costs for completing forms, working with employees, and reporting.
The letter goes on to say, “[A] poorly designed infrastructure along with recent increases in hacking require funding for cybersecurity at the IRS. Funding is needed for the ongoing development of the Criminal Investigation Identity Theft Clearinghouse, a specialized program to process identity theft tips and other improvements to enable the IRS to resolve potential problems quickly.”
In addition, the APA noted that while the IRS’ budget allocation decreased, the agency’s responsibility increased.
“The APA does not take a position on the Affordable Care Act (ACA); however, the IRS is charged with administering the premium tax credits, providing assistance with health insurance deductibles and co-payments for taxpayers with modest incomes, and responding to employers’ questions. As long as the ACA is operating, the IRS’ responsibility under the law requires funding.”
According to the National Taxpayer Advocate, more than 150,000 financial institutions in 112 countries are registered with the IRS under the Foreign Account Tax Compliance Act. APA’s letter asks Congress to ensure that the IRS can analyze the information provided by these institutions and pursue problems.
The legislation cleared the Senate Subcommittee on Financial Services and General Government by a 16-14 vote. When the full Congress returns from summer recess, priority is likely for IRS funding and other budget issues.