Message from the Chair

• Publication year: 2016
• Author: By Robert S. Horwitz

Message from the Chair

By Robert S. Horwitz

Since 2010, Congress has drastically reduced the Internal Revenue Service's ("IRS") budget. The modest increase in the IRS budget for the 2015-2016 fiscal year did not return funding to the level of prior year which has lead to a sharp drop in IRS staffing. The IRS Criminal Investigation division has fewer special agents than at any time in the past 45 years. Many other IRS functions have had similarly severe reductions in staff.

At the same time that the IRS has seen its staff and budget decline, the IRS has watched as the programs it is legally obligated to administer increase. This includes the Affordable Care Act. The IRS currently is the largest administrator of social service programs in the United States. It oversees the earned income credit, the child-care credit and education credits, among other social programs.

To address the crisis caused by its inadequate funding of the United States' principal revenue collecting agency, Congress has taken positive steps to ensure that additional revenues are collected. Section 32102 of the Fixing America's Transportation Act requires the IRS to contract with private collection agencies to collect tax receivables that the IRS has removed "from the active inventory for lack of resources or inability to locate the taxpayer." So Congress cuts IRS funding, which leads to its lacking resources to collect taxes and to locate some taxpayers. Then Congress requires the IRS to outsource tax collection due to the lack of resources needed to effectively collect all past due tax liabilities. Being from Chicago, I tend to be cynical, but since this bill had bipartisan support, we know that we cannot say "the fix is in."

This is not the point of this issue's Message from the Chair. It is, instead, one effect of the cut in funding that the National Taxpayer Advocate, Nina Olson, in her most recent Annual Report to Congress, has identified as one of the most serious problems facing our tax system: the creation of a two-class system.

Due to the decreased budget and the personnel cutbacks, the IRS has become increasingly reliant on technological fixes and the use of online services together with increased user fees. The IRS's "future state" plans contemplate an ever-increasing reliance on technology and a decreasing reliance on IRS personnel who can interact either by phone or in person with taxpayers and their representatives. In her report, Ms. Olson states...