Taxpayers may have a tough time getting assistance from the Internal Revenue Service this summer, experts say, when fraud victims and people handling audits are most likely to need help.
The Internal Revenue Service says its employees may face five to seven days of unpaid leave as a result of the across-the-board spending cuts that began on Friday. Acting commissioner Steven Miller said in a letter to employees Thursday that any furloughs would wait until after the end of the filing season, starting sometime in the summer. (Employees typically need to be given 30 days’ notice if they’ll be affected by such a furlough, he said.) But as MarketWatch previously reported, experts say the cutbacks could hurt victims of identity theft and taxpayers with complicated returns. See: Taxpayers’ newest headache: Congress.
The cuts could make it harder for taxpayers to get in touch with the IRS, which started this filing season with 5,000 fewer employees than it did two years ago, according to the National Treasury Employees Union, a labor union representing IRS employees. “The IRS is facing a perfect storm,” says Linda Stiff, a former acting commissioner for the IRS and now managing director with PricewaterhouseCoopers tax service. “It’s the culmination of fewer employees, late legislation and now the possibility of sequestration.” See: The IRS is too busy to talk to you.
The result could be fewer staffers to investigate identity theft and conduct audits, many of which take place over the summer, months after tax returns are filed, says Floyd Williams, a former IRS employee and senior tax counsel at Public Strategies Washington, a government relations firm. Much of the income-matching the IRS does to verify that taxpayers are not underreporting how much they made—and the taxes they owe—could be slowed by the furloughs, says Williams. While that may seem like good news for tax cheats, it could also mean greater interest charges if taxpayers receive collection notices later in the year, he says. See: 6 ways to avoid an audit.
Miller and acting Treasury Secretary Neal Wolin have said the agency will have to furlough employees if Congress fails to avoid the $85 billion in federal cuts known as sequestration. “Our greatest expense, by far, is employee pay,” Miller said in the memo to employees.
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