One unheralded part of the widely-criticized CRomnibus bill came to light last week when IRS Commissioner John Koskinen (shown) complained about the $346 million cut in his agency’s funding and the possible impact it would have on its services. The agency requested $12.4 billion, but the spending bill gave them just $10.9 billion, a reduction of $346 million from last year and $900 million below 2010 levels. In an e-mail to his employees on Wednesday, Koskinen warned them that “Our hiring — already limited at a ratio of one [new] hire for every five people who leave — will be frozen…. We will stop overtime except in critical situations.” He noted further that, adjusted for inflation, the IRS budget is about where it was back in 1998.

On Thursday, Koskinen expanded his remarks to include what those budget cuts over the last four years might mean for the agency, and for taxpayers. First, the agency’s responsibilities have been greatly expanded to include monitoring and enforcing the provisions of ObamaCare as well as the Foreign Account Tax Compliance Act (FATCA) requiring taxpayers with accounts outside the United States to report on them.

In addition, a government-wide mandated one percent cost-of-living increase in pay and benefits will cost the agency another $250 million. That means that the cut in funding by Congress translates into a real-world cut of closer to $600 million.

Koskinen told reporters about how the agency might have to handle the additional cuts: delaying refund checks and furloughing — giving people days off without pay — as well as reducing the number of enforcement agents tracking down tax cheats and identity thieves. Said Koskinen, “Everybody’s return will get processed. But people have gotten very used to being able to file their returns and quickly getting a refund. This year we may not have the resources, the people, to provide refunds as quickly as we have in the past.”

Because of the hiring freeze, taxpayers will likely find it difficult to reach the agency with questions as they struggle to complete their returns after the first of the year. According to the IRS website, “Last year … the IRS could only answer 61% of customer service calls, and those who got through had to wait nearly 18 minutes on hold.”

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