The Washington Post By Lisa Rein 11/3/15 Internal Revenue Service Commissioner John Koskinen said Tuesday that taxpayers should expect customer service to “get worse” during the upcoming filing season unless Congress boosts the agency’s budget — worse, that is, than the new … Continue reading →
Not many federal administrators would so bluntly acknowledge the failure of their agencies to serve taxpayers.
But when 60 percent of taxpayers can’t reach a customer service agent by telephone, even as the IRS is collecting $3 trillion from them, the situation is obvious.
“We certainly can’t afford to have taxpayer service be any worse than it is,” IRS Commissioner John Koskinen said in an interview, “although it’s hard to imagine it being much worse than it is.”…
…Years of punitive budget cuts have led to hiring freezes, understaffing and the poor service many taxpayers are experiencing…
…We continue to do whatever we can to become more efficient and to maximize the use of our resources. But when you lose 13,000 employees, which we’ve had to do because of the budget cuts, and we expect to lose another 3,000, you run up to physical limits of no matter how efficient you get, you clearly are becoming much less effective… Continue reading →
Some $1.4 trillion in individual income taxes are due to the IRS on April 15. But for many Americans, that’s only the half of it. A new report from the U.S. Congress’s Joint Committee on Taxation shows that looking only at income taxes misses most of what we pay to the federal government each year.
The average American pays an income tax rate of 10.1 percent, the Joint Committee shows, although that varies quite a bit depending on income:
Ten percent seems low, doesn’t it? The official income tax rates start at 10 percent and go all the way to 39.6 percent. The Joint Committee is also accounting for lots of income that never gets taxed, such as Medicare and Social Security benefits, employer-paid insurance, and the employer portion of payroll taxes. Also, taxpayers pay the highest rates, above 28 percent, only on earned income above $200,000 or so. The IRS takes far less from the first $200,000 earned, especially after deductions, and from investment income. Finally, as the chart shows, many poor Americans pay zero taxes and even get money back: About 32 million people benefit from that Earned Income Tax Credit.
Just looking at income taxes can be misleading, however. All salaried workers also pay a 7.65 percent payroll tax to cover Social Security and Medicare, and higher earners owe another Medicare tax. Their employers also must pay the same amount in payroll taxes for each worker. The government collected $1 trillion from payroll taxes last year:
Wealthy Americans end up paying taxes at a lower rate than poor and middle-class Americans, because the government collects Social Security tax only on annual wages up to $118,500.
On top of individual income and payroll taxes, the federal government collects $93.4 billion in excise taxes on such things as fuel, cigarettes, alcohol, and plane tickets. The feds take 7.5 percent of every airline fare, plus $4, for example; the gas tax is currently 18.4¢ per gallon.
Add up all the categories of taxes paid by individuals—income, payroll, and excise—and this is what each income group will end up paying this year, the Joint Committee estimates:
The tax burden rises progressively with income, with the wealthiest paying a third of their income to the federal government. One exception to the tax rate’s steady rise through the income brackets: Americans who earn less than $10,000 per year, who don’t get enough from their earned income tax credits at tax time to make up for the payroll and excise taxes they pay all year.
The Internal Revenue Service says it has been forced to curtail enforcement against tax cheats, a fallout from five years of budget cuts.
But after the Federal Eye reported this week that a team of revenue officers in the Dallas area does not have the resources to go after taxpayers who owe less than $1 million — so it can focus on high-rolling delinquencies of $1 million or more — the IRS found itself in a predicament.
The agency does not want to give the public the impression that it is not even attempting to collect from cheaters unless they owe huge sums.
In fact, thousands of revenue officers across the country, and hundreds in Dallas, are still pursuing lower-dollar tax cheats. Just not as many of them as before.
Here’s a statement the IRS sent us late Wednesday:
“The IRS enforcement workforce has declined more than 5,000 positions since 2010, and that includes a reduction of revenue officers who collect money owed by taxpayers. Given these limitations, we must make difficult decisions on where and how to collect tax revenue based on the amount of taxes owed, available staffing resources and the best collection options available. This can vary by office and other factors. There is no doubt that we have cut back on personal visits to those who owe money. While the amount of money owed is significant factor in the workload that is assigned to our revenue officers, it’s inaccurate to suggest that we only pursue cases above $1 million and simply ignore collection in other cases. We have a variety of collection tools available to collect tax debts; personal visits are just one of the options available.
The group manager interviewed in Dallas oversees a group of revenue officers that specialize in cases with a balance due of more than $1 million. It’s important to note that we have other collection groups that work other less complex cases that have balances due of less than $1 million. Regardless, it is clear with our diminished funding that we do not have enough staffing resources to reach all of the delinquent tax accounts.
It’s important to keep in mind last year these collection efforts recouped more than $33 billion in tax debts from taxpayers. That’s more than three times the IRS budget of $10.9 billion.”
(Lisa Rein covers the federal workforce and issues that concern the management of government.)
(Congress in recent years has cut the IRS budget which adversely affects it fulfilling its responsibilities as explained in “Cutting IRS staff leads to cutting taxpayer services and collections.” Some Congressmen have issues with the IRS even to the extent … Continue reading →
“From January first through February 14th this year, the IRS answered only 43 percent of the calls it received from taxpayers seeking to speak with a customer service representative, and those taxpayers who managed to get through sat on hold an average of about 28 minutes,” she said. “By comparison, during the same period last year, 77 percent of taxpayers got through and waited on hold an average of about 10 minutes. The IRS is now only answering the most basic of tax-law questions through April 15, and none after that. And it is no longer preparing tax returns for the most vulnerable taxpayer populations: elderly, disabled and low-income…
…“The IRS’s budget has been reduced by about 17 percent in inflation-adjusted terms since FY 2010,” which (Olson) said so far has resulted in almost 12,000 fewer employees, a 12.3 percent drop. There are projected cuts of several thousand more during this fiscal year.
This adds up to “the worst levels of taxpayer service since at least 2001, when the IRS implemented its current performance measures,” Olson said… Continue reading →