(Bloomberg) — The IRS is freezing hiring, stopping most overtime pay and warning that during the upcoming filing season about half the phone calls it receives won't be answered.
The spending law signed by President Barack Obama yesterday gives the Internal Revenue Service $10.9 billion for the fiscal year ending Sept. 30, 3 percent less than last year and 12 percent below the administration's request.
"We have found substantial efficiencies in recent years, but there is little left to cut without hitting our core service and enforcement operations," IRS Commissioner John Koskinen wrote today in a message to employees. "This year we will have little choice but to do less with less."
Recommended For You
Adjusted for inflation, Koskinen wrote, the IRS will have as much money as it did in 1998, when it processed 30 million fewer returns.
The budget cut will make it tougher for taxpayers to get answers during the first filing season when taxpayers will be dealing with the implications of Obamacare, including the individual mandate to purchase health insurance and the tax credits that subsidize coverage.
The hiring freeze will have "only a few mission-critical exceptions," Koskinen wrote.
The budget cuts will prevent the tax agency from collecting about $2 billion it would otherwise get through enforcement efforts, Koskinen wrote.
"I am concerned by this situation and alarmed at the negative impact this will have on taxpayers and our nation as well as our workforce," he wrote.
Republicans in Congress pressed for the budget cuts, partly as a way to curb the tax agency, which gave extra scrutiny to Tea Party groups seeking nonprofit status.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
