Jimmy Rodefer: IRS Sailing Into Tax Season by Sending Budgetary SOS

The Internal Revenue Service is a ship steaming into a tax season unlike any in its history — or the country's — while shooting up flares and sending emergency budgetary SOS calls.

You might begin to think that if it weren't for bad luck the IRS would have no luck at all, depending on how one defines "luck."

Along with the reported allegations of the targeting of conservative groups for special "consideration," lost e-mails and hard drives, etc., this tax season is the first to deal with Obama- care requirements.

The IRS is the law's principal player in determining whether Americans have health insurance or approved options and determining whether taxpayers have benefited correctly from the Obamacare premium tax credit. The PTC is the subsidy paid by taxpayers (through the government) to help pay for health insurance for people meeting eligibility requirements.

The creation of form 1095-A and its associated PTC Form 8962 adds potentially hundreds of millions of new documents flowing into the IRS during the 2015 tax season.

Also, late last year the IRS repeatedly warned that tax season could be delayed and disrupted because a series of tax breaks called tax extenders hadn't passed Congress.

Combine those challenges with the IRS having to process more than 150 million tax returns, and the seas looked rough.

The sun broke through, it was believed, when in late December Congress passed a bill extending the tax breaks. Tax season would begin on schedule.

Now we learn that despite the budget deal there is yet another disruption in the IRS force, this time over money appropriated to run its operations. On Jan. 13, IRS Commissioner John Koskinen sent a memo to IRS employees saying furloughs may take place later in the year — invoking a shutdown — because of what the commissioner says is a de facto cut of $600 million in the IRS's budget.

The Journal of Accountancy reported on Jan. 13 that nearer-term consequences exist: "Koskinen also warned that cuts in overtime and temporary staff of more than $180 million will delay refunds for some taxpayers and further increase delays in responding to taxpayer correspondence and phone calls."

What's going on in Washington is yet another political game of chicken. The IRS says it doesn't have enough money in its $10.9 billion budget to do its job properly and wants more money. A Republican Congress is unlikely to produce it. The IRS ups the ante by saying money (about $2 billion) will go uncollected and nearly 50,000 fewer audits will be closed.

None of this is likely to upset most American taxpayers, apart from the potential for some returns to be delayed. But the situation is likely a harbinger of other governmental departments and agencies pleading poverty throughout the year. The Republican Congress may well point at the total amount of spending and say if you can't get by on $3.5 trillion, too bad.

That's what happens in a game of chicken, trying to figure out which side will flinch first. 

This article was originally published in the Knoxville News Sentinel on January 25, 2015.


Tagged Affordable Care Act, Featured, IRS, #JimmyTalk, Taxes