Message to IRS Employees from IRS Commissioner

[jklcpa]

highlights appeared in yesterday's Journal of Accountancy -

 

Dear IRS Employees,

 

As I promised last month, I am following up with you to share some important new details about what the 2015 budget cuts will mean for you and your colleagues as well as the nation's taxpayers.

There is no way around the severity of these budget cuts without taking some difficult steps. Congress approved a $10.9 billion budget for us, which means we must absorb a cut of $346 million during the remaining nine months of the fiscal year. But that really amounts to a total reduction of about $600 million when you count another $250 million in mandated costs and inflation. This is the lowest level of funding since 2008, and the lowest since 1998 when inflation is considered.

To determine the full impact of this budget cut, our senior leadership and our financial team have been working since its enactment in December. We have also discussed the situation with NTEU during this period as we grappled with some very difficult choices that none of us want to make.

As I have said before, this year we are looking at a situation where realistically we have no choice but to do less with less. With that mind, we have made additional decisions to reflect the budget reduction.

Here are a few examples of what these cuts will mean this year:
 

1. Delays to critical IT investments of more than $200 million. Impact: This will hurt taxpayer service and cost-efficiency efforts as well as reduce outside contractor support for critical projects.
 

This means that new taxpayer protections against identity theft will be delayed.

 

The Taxpayer Advocate Service won't be able to obtain a new case management system to oversee taxpayer hardship cases.

 

Aging IT systems will not be replaced, increasing the risk of downtime that affects taxpayer service and your ability to work effectively.

 

We will not be able to invest upfront money to gain future operational savings, such as moving to a shared cloud infrastructure and reducing data center space.

 

2. Enforcement cuts of more than $160 million. Impact:
 

Fewer audit and collection cases. Reduced staffing in enforcement will result in at least 46,000 fewer individual and business audit closures and more than 280,000 fewer Automated Collection System and Field Collection case closures

As a result of the hiring freeze, we will lose about 1,800 enforcement personnel through attrition during FY 2015.

The reduced enforcement staffing for just FY 2015 means the government will lose at least $2 billion in revenue that otherwise would have been collected.
 

3. Cuts in overtime and temporary staff hours by more than $180 million. Impact:
 

Delays in refunds for some taxpayers. People who file paper tax returns could wait an extra week - or possibly longer - to see their refund. Taxpayers with errors or questions on their returns that require additional manual review will also face delays.

Increasing correspondence inventories. We realize there will be growing inventories in Accounts Management, and taxpayer correspondence will face lengthy delays.

Taxpayer service diminished further over the phone and in person. We now anticipate an even lower level of telephone service than before, which raises the real possibility that fewer than half of taxpayers trying to call us will actually reach us. During Fiscal Year 2014, 64 percent were able to get through. Those who do reach us will face extended wait times that are unacceptable to all of us.
 

4. Extending the hiring freeze through FY 2015. Impact: As a result of the hiring freeze and assuming normal attrition rates, we expect to lose between 3,000 and 4,000 additional full-time employees. The total reduction in full-time staffing between FY 2010 and FY 2015 is expected to be between 16,000 and 17,000.

During this process, we tried to protect critical areas as much as we could. We will still work to deliver as smooth a filing season as possible. We will maintain IT systems critical to the filing season and tax enforcement. This commitment also includes providing appropriate training and technology support for you and your colleagues to help you do your job.

Even with all of these reductions, we still face a remaining budget shortfall. Unfortunately, this means at this time we need to plan for the possibility of a shutdown of IRS operations for two days later this fiscal year, which will involve furloughing employees on those days. We plan to work with NTEU regarding this possibility, and will fulfill our bargaining obligation with NTEU. This is an area of major concern for me and the entire IRS leadership team. Shutting down the IRS will be a last resort, but I want to be upfront with you about the problem. I know even a day's worth of pay makes a huge difference in household budgets and family situations. While we will continue to do the best we can to avoid this action, the cuts in the budget are so deep that we may have no other choice.

If this becomes necessary, our goal will be to minimize disruption to employees and our operations as well as taxpayers and the tax professional community. The timing for these dates would be late in the fiscal year, so between now and then we can do everything possible to avoid them.

I realize the importance of a possible shutdown. We will be engaging NTEU in negotiations shortly. Furthermore, we will continue to keep you updated on this in the weeks and months ahead.

The effect of these cuts will hurt taxpayers and our tax system. But I know firsthand the commitment and dedication you and your colleagues have to the nation and to taxpayers, and I know you will continue to do your best even as we are forced to do less than all of us want.


- John A. Koskinen

[Jack from Ohio]

If the IRS will clean up its own house, the top 2 levels of administration, then Congress may see fit to allocate more funds.  The IRS has shown repeatedly that is cannot use funds properly or efficiently. 

 

These cuts are due to the corruption at the top of the IRS.  The only tool Congress has is to cut funding.  It is very obvious that the Justice Department has been told to keep hands off any IRS person.

[jklcpa]

Please keep the politics out of the discussion. I posted the letter to show how the cuts will greatly impact our work, nothing more.

[mcb39]

Please keep the politics out of the discussion. I posted the letter to show how the cuts will greatly impact our work, nothing more.

 

Accounting Today

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Jan 15, 2015

 

Top Stories

 

IRS Commissioner Warns Tax Refunds Could Be Delayed by Budget Cuts

by MICHAEL COHN

 

Taxpayers who file their tax returns on paper could face delays of a week or more on their refunds this tax season because of budget cuts, Internal Revenue Service commissioner John Koskinen warned.

READ MORE »

 

Here is some backup info on the post that I made two days ago.

Edited January 15, 2015 by jklcpa
removed excess spacing due to c&p for easier read

[Jack from Ohio]

Please keep the politics out of the discussion. I posted the letter to show how the cuts will greatly impact our work, nothing more.

Then don't post the political portion.  It is IMPOSSIBLE to separate the actions of the IRS from politics.  Excuse me for calling it like I see it.

[Jack from Ohio]

Now I have been blocked from editing or removing my posts.  SWEET!!

 

Do you think that the IRS commissioner released that information for any other reason that political positioning and to make political points??  I am not that blind.

[jklcpa]

Then don't post the political portion.  It is IMPOSSIBLE to separate the actions of the IRS from politics.  Excuse me for calling it like I see it.

 

If I edited out the first paragraphs to exclude any mention of Congress or budget in the rest of a lengthy letter, the purpose of the letter would hardly make sense, and that small portion of the letter hardly constitute a "political" discussion within that letter when no whys and wherefores of the reasons behind those cuts were mentioned at all.

[jklcpa]

Now I have been blocked from editing or removing my posts.  SWEET!!

 

Do you think that the IRS commissioner released that information for any other reason that political positioning and to make political points??  I am not that blind.

 

The purposes of posting it here was to show the impact on our work this season and in future, not the motives of the commissioner or the timing of its release.  The budget was approved and he wrote a letter to his agency staff. I don't know why you think its timing or content is inappropriate, or that it should have been released at a different time.  That wouldn't even make sense.

[Jack from Ohio]

The purposes of posting it here was to show the impact on our work this season and in future, not the motives of the commissioner or the timing of its release.  The budget was approved and he wrote a letter to his agency staff. I don't know why you think its timing or content is inappropriate, or that it should have been released at a different time.  That wouldn't even make sense.

If you want ZERO political comments, then do not post anything with political content. 

[MsTabbyKats]

On the same topic:

http://www.msn.com/en-us/money/taxes/prepare-for-devastating-tax-season-irs-watchdog-says/ar-AA8bCMR?ocid=mailsignout

,..

I'm glad I had already decided "no new clients...except for the simple ones"....."raising rates for everyone".....and "not doing anything complex for current clients" (new complexities only).

 

I have a footer on my e-mail for everyone...about rate hikes. 

[OldJack]

The IRS is itself political so it is impossible to comment on the subject without being political.  All talk on the subject of taxes has now become political with this liberal administration.

[Lee B]

The IRS is itself political so it is impossible to comment on the subject without being political.  All talk on the subject of taxes has now become political with this liberal administration.

 

Or with this conservative congress.

[jshtax]

Am I supposed to be sad that fewer and fewer clients will be harassed by improperly trained IRS agents? My guess is there will be more mail in audits with 100% dis allowance that will require more of our time responding to a phantom agent on the other side.

[kcjenkins]

Please keep the politics out of the discussion. I posted the letter to show how the cuts will greatly impact our work, nothing more.

Judy, I don't think this is a subject that can be discussed without recognizing the political angle that is an integral part of everything Treasury does and says. I agree it should not devolve into a political thread, but what you are asking is a bit extreme.  

[FreedomTaxed]

"This means that new taxpayer protections against identity theft will be delayed."

 

This shouldn't change our job in the slightest. We use the identity PIN when required. Other than that, if there's identity fraud, then we just make a paper mailing and let the IRS Fresno figure it out. All it takes is time.

[jklcpa]

KC, perhaps what I intended was misunderstood or was lead astray toward politics by the first reply made in this topic, so I'll try to explain what I was going for.  In two other topics, Jack from Ohio posted responses that are related to these changes at the IRS and did so without involving politics. One was about his contemplation on the reduced telephone support, and the other about how he expects more computer-generated audits due to these changes at IRS.  Here are quotes of Jack's statements:

 

Jack said:  I am not sure how to handle the extra time involved to contact the IRS about a client.  Contemplating -  If it is an issue that is caused by careless or irresponsible action of the client, I will bill for the time.  If it is caused by the IRS, I will also bill the client.  Of course, if it is due to me or my actions in any way, I will not charge.

 

I am quickly becoming hardened about moving the costs of these things to the client.

 

AND THE OTHER QUOTE:

 

Please note:  The cutbacks at the IRS will severely inhibit their ability to do anything.  I look for more computer generated mail audits and a HUGE spike in the number of CP2000 notices starting about 12 months from now.

 

 

To further explain what I'd hoped to discuss, here are some other examples:

 

• For those that rely on telephone support, will you change anything? Call less often, or still call and stay on hold? Bill the extra time? Put the call on speaker while working on something else and not bill beyond what seems reasonable? Rely on other sources for answers?  I know that at least one person has mentioned her reliance on telephone support in the past, so I didn't think it would be a stretch to discuss that.
• For those clients filing paper returns, what will you tell them about processing or refunds?
• For those that handle a lot of audit work, what will you be telling clients about timing and expectations? Has this changed your expectation of receiving favorable outcomes?
• Will your preferred method of contacting IRS change from calling to written correspondence now that both will have longer delays?
• How will you answer clients when asked for a time frame to expect a response or resolution of a problem?
• Or, do you see this as not having much of an impact and will slog through it, or because there are much bigger worries practitioners are facing in preparing the returns this season?

 

I'm very sorry if anyone still thinks those ^ areas are too extreme to comment on  , if the topic has caused a ruckus, or if it has made anyone too uncomfortable to respond. 

 

For my own practice, if I must call in I will be putting the call on speaker while continuing on with other work, and I will bill for only the time speaking with an agent and not for any extended hold times.  In general, I prefer written communication when dealing with the IRS.

 

If any returns are filed with refunds where credits may be questioned, I'll be alerting clients that delays in receiving refunds are a possibility.

[Jack from Ohio]

KC, perhaps what I intended was misunderstood or was lead astray toward politics by the first reply made in this topic, so I'll try to explain what I was going for.  In two other topics, Jack from Ohio posted responses that are related to these changes at the IRS and did so without involving politics. One was about his contemplation on the reduced telephone support, and the other about how he expects more computer-generated audits due to these changes at IRS.  Here are quotes of Jack's statements:

 

 

To further explain what I'd hoped to discuss, here are some other examples:

 

• For those that rely on telephone support, will you change anything? Call less often, or still call and stay on hold? Bill the extra time? Put the call on speaker while working on something else and not bill beyond what seems reasonable? Rely on other sources for answers?  I know that at least one person has mentioned her reliance on telephone support in the past, so I didn't think it would be a stretch to discuss that.
• For those clients filing paper returns, what will you tell them about processing or refunds?
• For those that handle a lot of audit work, what will you be telling clients about timing and expectations? Has this changed your expectation of receiving favorable outcomes?
• Will your preferred method of contacting IRS change from calling to written correspondence now that both will have longer delays?
• How will you answer clients when asked for a time frame to expect a response or resolution of a problem?
• Or, do you see this as not having much of an impact and will slog through it, or because there are much bigger worries practitioners are facing in preparing the returns this season?

 

I'm very sorry if anyone still thinks those ^ areas are too extreme to comment on  , if the topic has caused a ruckus, or if it has made anyone too uncomfortable to respond. 

 

For my own practice, if I must call in I will be putting the call on speaker while continuing on with other work, and I will bill for only the time speaking with an agent and not for any extended hold times.  In general, I prefer written communication when dealing with the IRS.

 

If any returns are filed with refunds where credits may be questioned, I'll be alerting clients that delays in receiving refunds are a possibility.

Good luck with this tax season.

[SaraEA]

It's already started folks.  In our office, and I'm sure in yours, all summer long you and/or clients have gotten IRS letters stating "Thanks for responding to our CP2000.  We need another 45 days to review the materials you sent and will get back to you then."  Then before 45 days have passed the client gets another notice about another 45 days.  By law the IRS has to respond within 30(?) days, so their response is a letter saying they need more time.

 

Real people have to review the materials showing they rolled over that IRA distribution, or the kid really went to college, or whatever.  There aren't as many real people to do that anymore, so they are keeping the USPS in business.  Not to mention confusing and scaring our clients.  People are understandably upset when a letter from the IRS shows up in their mailbox, so they call us.  We read the letter to them:  "All it says is the IRS needs more time."  "Oh, I read that, thank you so much."  Wastes our time, freaks the clients out, and how about the poor IRS agents who now have caseloads stretching months away but have to meet legal deadlines?  Is Congress nuts???

[Lee B]

yes !