Shortcuts are slowing killing the IRS

Stick it to us IRS.

Congress has shortcut the IRS making it harder to us normal taxpayers to fight fraud and collect monies from delinquent taxpayers.

As Nina Olson, National Taxpayers Advocate put it, there is a imbalance between its workload and its resources is becoming unmanageable.

Collections from IRS tax audits are down over $4 billion since last year with the exact same amounts of Agents working cases.There has been no explanation from the IRS why the decline of $4 Billion from last year.

Also tax fraud is at a all time high , up over 70% from last year. Most of the fraud comes from phony taxpayers filing fraudulent tax returns from taxpayers with stolen identities and social security numbers.IRS handled more than 226,000 cases of identity fraud in 2011, a 20 percent increase over 2010.

One of the reason for all the tax fraud is the lack of sophisticated software used by the IRS. It is out of date and really does not have the ability to manage large scale tax fraud. Actually, private companies would have a better systems to catch crooks than IRS says Michael Sullivan, a IRS Tax Expert with Fresh Start Tax LLC

Bottom line, IRS just not have the resources and the funding to fix these problems or epidemics.

Internal Revenue Service collected just north of $2.3 trillion last year. The  budget of the Internal Revenue Service this year is $11.8 billion, $300 million below last year and $1.5 billion less than requested by President Barack Obama.

The truth of the matter is that IRS is effectively the accounts receivable department of the federal government. With less money to operate, there will be less to fund the growing tax debt.

With this being a political year, the issue of funding IRS is a politically sensitive issue especially in times of huge budget shortfalls, many lawmakers have little interest in being generous to the widely unpopular agency, which processes 141 million individual tax returns annually, including almost 120 million requests for refunds. Since everyone hates the word IRS the thought of funding the Agency is sickening to most taxpayers. However what most taxpayers do not understand it that the IRS focuses on tax cheats more than the average Joe.

Republican Congressperson  said it best- Jo Ann Emerson, R-Mo., “Like families across the country, the IRS will have to do more with less, she    heads the House Appropriations subcommittee that controls the agency’s budget.

In one measure of error, Olson’s bureau received 21,000 complaints from taxpayers last year after the IRS blocked requested refunds because it suspected fraud. Three in four of them eventually qualified for the refunds, which averaged $5,600 and typically took six months to reach taxpayers. This 6 month period is outrageous when you are waiting for a hard earned $5600.00 refund.

There will be no quick fix.

Related posts:

1. IRS Issues some interesting Statistics
2. What are the chances of you getting AUDITED BY THE IRS ?
3. Erroneous Tax Credits – $2.1 million Taxpayers received $3.2 Billion in erroneous Education Credits – Fresh Start Tax LLC – IRS Tax Relief
4. IRS Statistics for 2010
5. IRS Offshore Tax Program yields HUGE BUCKS – Expected to Grow