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The Impact of IRS Budget Cuts on Taxpayers and the State

The IRS is an agency tasked with enforcing the United States’ tax laws. It is responsible for collecting taxes that provide essential services such as education, infrastructure, and public safety.

Over the years, the budget allocated to the IRS has been shrinking, and this has had several consequences that impact taxpayers. In this article, we will explore the effects that funding cuts have had on the IRS and how the organization works to enforce tax laws.

Consequences of IRS Budget Cuts

One of the primary impacts of budget cuts on the IRS is the reduction of staff. In recent years, the IRS has had to cut its workforce, meaning fewer employees are available to address taxpayer needs.

This has resulted in lengthier wait times when people attempt to contact the agency by phone or correspondence. Not only does this cause frustration for taxpayers, but it also places the burden of resolving their tax issues on the agency’s remaining staff members, who have to deal with more cases.

Another consequence of budget cuts is a reduction in the agency’s ability to enforce the tax code. The IRS has to prioritize its cases, meaning that it focuses more on the entities that owe significant sums of money.

This leaves individuals with smaller outstanding balances, who may still be breaking the law, at a disadvantage. The IRS has to spend less time investigating less wealthy taxpayers and can go after more lucrative targets.

Audits Rates and Who Benefits

The wealthy also benefit from lower audit rates. Budget cuts lead to a shortfall of manpower available to perform audits, and this results in fewer audits performed each year.

Wealthy Americans can use legal strategies to reduce their tax burden, which means that more scrutiny is needed to ensure that they are paying their fair share. An audit is a time-consuming and expensive process for both the IRS and taxpayers.

The wealthy and their accountants can use these limitations to their advantage, which is not fair to average Americans. On the other hand, lower-income earners do not have access to these methods and are thus less likely to be audited.

This may seem like an advantage, but in reality, it means that less wealthy taxpayers are bearing more of the burden of funding public services. This is because they are less likely to have a tax strategy than their wealthier counterparts and thus are subject to more rigorous scrutiny by the IRS.

Current IRS Funding Situation

Currently, the IRS is under pressure to restore funding to combat these issues. President Biden’s administration has proposed the Inflation Reduction Act, which allocates approximately $80 billion over the next decade for modernizing technology and hiring enforcement agents.

The increase in staffing would lead to faster resolution of tax issues for taxpayers and better enforcement of tax laws by the agency. Unfortunately, the Republican-controlled House of Representatives has recently rescinded some of this funding, which has brought the IRS back to a depleted state.

This reduction in funding will make matters worse as a reduction in enforcement staff means the agency will be unable to address the needs of taxpayers effectively.

Conclusion

In conclusion, the IRS is a vital institution that enforces tax laws and collects funds necessary for the functioning of the US government. Budget cuts have led to a reduction in personnel and a decrease in audit rates.

Wealthy taxpayers employ legal strategies to avoid scrutiny, while those with less wealth are subject to more rigorous investigation. The Biden administration has proposed the Inflation Reduction Act to allocate funding to enhance the agency’s technology and hire more agents, while the Republican Congress has cut its funding.

Continuous and appropriate funding is essential to the IRS’s effectiveness and the government’s functioning. In summary, the IRS budget cuts have resulted in a reduction of staff, longer wait times for taxpayers to get service, a decrease in the government’s ability to enforce tax laws, and a reduction in audit rates.

Wealthy taxpayers benefit from lower audit rates while less wealthy ones bear a larger tax burden. President Biden’s proposed Inflation Reduction Act aimed to allocate funds to modernize technology and hire more enforcement agents, but the recent rescinding of funding by the Republican-controlled House will cause more harm to taxpayers.

Appropriate funding is necessary for effective IRS operations and the functionality of the government. The takeaway is that budget cuts can lead to long-term negative impacts on taxpayers and the country.

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