IRS cuts make for tough tax season
If you find filing your income taxes to be a headache, it's about to get much worse.
The Internal Revenue Service (IRS) is cutting taxpayer services just as more complicated tax laws are coming into play, and that could spell trouble for those filing their tax returns. In fact, National Taxpayer Advocate Nina Olson said this season could rank as the worst since 1985, which was riddled with computer failure, lost returns and delays.
Over the past five years, the IRS budget has shrunk about 10 percent, but that does not account for any cost increases. Congress cut the budget by $346 million for the budget year that ends in September 2015. The $10.9 billion budget is $1.2 billion less than the agency received in 2010. During the same time period, personnel has fallen by at least 8 percent.
As a result, the agency expects the number of audits to decline, technology upgrades to be delayed and the agency might even be forced to shutdown and furlough workers for two days later this year, according to IRS Commissioner John Koskinen.
"People who file paper tax returns could wait an extra week, or possibly longer, to see their refund," Koskinen said in an email to IRS employees last week. "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. Those who do reach us will face extended wait times that are unacceptable to all of us."
Only half of the 100 million people expected to call the IRS, 47 percent, will be able to reach a person. Those who get through will have to wait an average of 34 minutes. The spending cuts could also cost the government money, with $2 billion in lost tax revenue due to fewer enforcement agents, according to Koskinen.
New this year, tax filers will have to report information about their health insurance during the previous year. For people who get health coverage through their employer or government programs, they will simply check a box on their return. For others who got their insurance through state and federal marketplaces, they will have to file a new form. Those who received government subsidies to help pay premiums will have to include more detailed information.
So, what is a taxpayer to do?
First, be as prepared as possible in advance. "Have documents ready. Put together a file of income and earnings forms, interest and dividend statements and maybe a copy of last year's tax return. That's good to have as a reference," said Patricia Svarnas, IRS spokesperson.
Employers have until January 31 to provide employees with W-2 wage statements. While some people may go ahead and use a previous pay stub to start preparing their tax return, Svarnas recommends that taxpayers be patient and wait for the W-2 to come in the mail.
"Calling the IRS will not help in this case because it's the employer who issues the W-2, not the IRS," Svarnas said.
For those using a professional preparer, make sure the person is legitimate.
"Check with family and friends for recommendations, make sure the preparer signs the tax return and uses their specific professional tax ID number. Also, you should always feel comfortable with all of the information on your return. Even though someone else might be preparing you're return, you are ultimately responsible for what's on it," Svarnas said.
Before you pick up the phone to call, check the website at www.irs.gov and try to answer any questions that way. If you do have to call, try during off-peak times either later in the afternoon or later in the week.
The Associated Press contributed to this report