Beverly Hills, CA -- (SBWIRE) -- 04/21/2013 -- The IRS is in a state of decline despite efforts to raise revenues. Several factors are weakening the ability of the IRS to effectively solve tax-related problems. Taxes and the demand for tax-related solutions have increased while the number of individuals necessary to properly maintain the intricate IRS system has decreased. The causes and consequences of this trend may create chaos for both the IRS and those seeking a way to resolve their IRS problems.
Tax compliance has become more difficult since the effective federal tax rates have increased. A new top tier tax rate has been added for 2013 and benefits such as the payroll tax holiday have been allowed to expire. Even with the “fiscal cliff” compromise, the nation as a whole will experience a general increase in the amount of taxes due.
These problems are worsened by the increasing likelihood that experienced IRS auditors and revenue officers will retire due to population shifts. According to the 2010 U.S. Census, the age groups “45 to 65 years” and “65 years and over” experienced the most growth (32% and 15%, respectively) while the age group “25 to 44” experienced the least growth (1%). In other words, retirement will push experienced workers out of the industry. Some staff within the IRS estimates that almost half of senior revenue officers will retire within the next five years. Not only will there be fewer individuals available to fill these positions, but these individuals will be younger and less experienced. This will result in the evolution and culture of less experienced IRS auditors and revenue officers who will be prone to more errors and mistakes.
The impending deficit of experienced workers is worrisome enough. However, in addition to the foregoing, the IRS has reduced the number of workers through its own means due to financial cutbacks and federal hiring freezes. At the end of 2012, the IRS was down to 97,717 employees: a nine percent decrease from 2010. Auditors and revenue officers are not the only ones affected. Departments such as customer service have also shrunk noticeably. People in need of assistance will have a much more difficult time paying taxes and resolving problems. These decreases in the IRS auditing and collection staff will result in lost revenue.
The cutback of staff members at the IRS has also led to a significant decrease in the filing of documents and tax liens pertinent to collection of delinquent taxes. Tax liens allow the government to place a claim on property for taxes that have not been paid. Although these documents put the taxpayer in a tough spot with respect to credit, they are generally aimed at resolving delinquent taxes and actually offer taxpayers certain rights, which may assist in the resolution of delinquent tax debt. Remarkably, IRS lien filings are down by over 70%. Without robust enforcement of regulatory procedure regarding delinquent taxes, more taxpayers will become engulfed in tax debt with fewer options of resolution. Concurrently, the IRS will miss out on collecting expected revenues, which partly defeats the purpose of raising taxes in the first place.
All of these emerging trends indicate potential trouble for the IRS in the future. Population decreases and financial cutbacks will continue to put a dent in the IRS workforce which will result in increasing the amount of time and effort in resolving an IRS problem. The Government seeks to raise revenue by allowing tax breaks to expire, but continuing decreases in IRS employees and employee experience will inhibit the amount of collected revenues while adding to the debt and frustration of the ordinary American taxpayer.
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The tax attorneys at Segal, Cohen & Landis LLP have settled thousands of tax cases with both the examination and collection divisions of the IRS. This has led to a loyal following of clients that very few firms can match. If you are not satisfied with the expertise and service of your current IRS representation, then you haven’t engaged the services of Segal, Cohen & Landis LLP.