Crisis at IRS tied to lack of funding, National Taxpayer Advocate says

The National Taxpayer Advocate says a lack of funding has hampered the IRS’s ability to do its job in recent years as news continues to swirl over its targeting of conservative groups — and now progressive ones as well — applying for tax-exempt status.

“While all this is grievous enough and in fact calamitous for public respect for and compliance with the tax laws (because once lost, trust takes a very long time to be regained), these events are symptoms of broader problems festering at the IRS,” Nina Olson wrote in one of her two annual reports to the House Ways and Means and Senate Finance committees.

Ms. Olson wrote that the IRS is “an agency in crisis” not because of the recent headlines; the real crisis “is a radically transformed mission coupled with inadequate funding to accomplish that mission.”

“If a tax agency both collects more than 90 percent of federal revenues — $2.52 trillion in FY 2012 — and administers the second largest federal antipoverty program (the Earned Income Tax Credit) as well as retirement, education, and health care policies in addition to all sorts of business incentives, and then there is an eight percent budget cut over three years, including an 83 percent training budget decrease — well, to put it mildly, bad things will happen to taxpayers,” she wrote.

For example, the report says, the agency failed to answer nearly 30 percent of Customer Account Services incoming calls between October 2012 and late May 2013, and on April 15 — Tax Day — the IRS answered just 57 percent of incoming calls.

“The IRS will cut corners, eliminate protections it doesn’t understand and deems unnecessary, make decisions in ignorance of the law, and generally not spend the time necessary to understand specific taxpayer concerns until things reach a crisis level,” she wrote.

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SEE ALSO: IRS auditor reaffirms that conservatives, not liberals, were targeted

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She proposes enacting an enforceable “Taxpayer Bill of Rights,” fund the IRS sufficiently, and restore training and travel related budgets “to levels that ensure IRS employees have the education and professional skills they need to administer our complex tax system and do so in a manner that respects taxpayers rights.”

The House Ways and Means Committee is holding a hearing Thursday morning to get an update on an IRS investigation into the improper targeting of “social welfare” groups applying for tax-exempt status.

Partisan broadsides are almost inevitable, especially with the recent revelations that Inspector General J. Russell George was apparently directed only to determine whether conservative groups were being unfairly targeted and that some progressive groups received additional scrutiny as well.