President Trump’s Proposed Cuts to the IRS Budget

Treasury Secretary Supports Increased IRS Hiring

New Treasury Secretary Steven Mnuchin has advocated for increased hiring at the IRS. During his confirmation hearings, he expressed concern that the IRS, a government agency tasked with collecting revenues, has seen its’ number of employees decline almost 30% over several years. He testified that he would tell President Trump that “when we add people, we make money.”

President Trump Disagrees

Secretary Mnuchin’s words did not resonate with the President, who has proposed a $239 million budget cut to the IRS. In the budget, the White House plan noted that:

“Diverting resources from antiquated operations that are still reliant on paper-based review in the era of electronic tax filing would achieve significant savings, a funding reduction of $239 million from the 2017 annualized level.”

The Impact on the IRS

Since 2010, the IRS has reduced its’ workforce by 13,000 employees and has seen its’ budge cut by 21%. Advocates for the agency have expressed that these cuts, over time, have eroded the agency’s ability to enforce tax laws or to collect taxes. There have also been complaints that these budget cuts and understaffing have eroded the IRS’ customer service and ability to properly address cyber-security (such as people using identity theft to steal other people’s tax returns).

So what are some of the impacts of these cuts?

  • A further reduction in the IRS workforce.
  • Fewer audits. In fact, IRS statistics show that in 2010, 1 out of every 90 tax returns was audited. In 2016, that number decreased to 1 out of every 140 tax returns.
  • Fewer audits means that more people are getting away with underpaying taxes. This means that the government is bringing in less revenue.
  • Worse customer support.
  • A decline in criminal investigations, leading to an increase in undiscovered tax crimes.
  • Fewer resources to dedicate to Tax Appeals or litigation.
  • Greater chances of settling a tax appeal, since the agency lacks the resources to take many cases to trial.

Another consideration is what will happen if President Trump and Congress pass legislation to overhaul the tax code. A reduced workforce and dramatically different laws will certainly impact the IRS’ ability to enforce the new laws.

These are times of great volatility regarding the IRS and possible changes to the tax code. A good tax attorney keeps up with changes in the law. You need an experienced tax attorney who can analyze these changes in the law as they happen and who can apply those changes to your benefit. I have been a tax attorney for over two decades and have a Master of Law Degree (LLM) in Taxation, and a license to practice in the United States Tax Court. I can help you resolve any tax issue. Contact The Law Offices of Robert S. Thomas at 847-392-5893 or visit our website today.

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