IRS Budget Cuts and Late Start to Tax Season May Delay Income Tax Refunds

WASHINGTON - Here’s a holiday season lump of coal you might not be expecting: the tax refund you count on to help pay those holiday bills very likely could be delayed, as the Internal Revenue Service (IRS) said the filing season will start on Jan. 31, instead of the initially-planned Jan. 21.

“Severe budget cuts and the 16-day government shutdown are delaying the start of the tax-filing season by ten days, and that hurts taxpayers,” said National Treasury Employees Union (NTEU) President Colleen M. Kelley. “As the holiday credit card bills come due early in the year, millions of Americans count on a quick refund to help cover those costs. This year, that money may not be there when they need it.”

Not only that, said the NTEU leader, the severe staffing shortage at the IRS as a result of the drastic budget cuts of the last two years will have a cumulative effect resulting in delays and slower service throughout the filing season.

The IRS refunds billions of dollars each year to taxpayers; it said it will not be able to process any tax returns before Jan. 31, regardless of the manner of filing.

The budget of the IRS has been slashed by $1 billion since 2010, resulting in a reduction of some 8,000 employees—including about 5,000 frontline enforcement personnel. Those deep cuts combined with the shutdown put the IRS nearly three weeks behind its tight timetable for being ready to start the filing season.

“The good tidings of the holiday season are tempered for many taxpayers by this delay. This is the real-life impact of the budget cuts and the shutdown. The IRS should be fully funded so taxpayers get the service they deserve, this holiday season and all year long,” said President Kelley.

The NTEU leader added that the impact is government-wide, since the IRS collects 93 percent of all federal government revenue. “Insufficient funding for the IRS reverberates throughout government, impacting the ability of one agency after another to serve the public in the way Americans need and expect,” she said.

During the filing season, because of the severe lack of staffing, taxpayers can expect to see longer lines at Taxpayer Assistance Centers and can expect to be put on hold for long periods of time when calling the IRS with a tax question.

“Staffing at the IRS is at its lowest point in many years,” said Kelley, noting that budget cuts also are forcing the IRS to bring back seasonal employees later and let them go earlier than in years past. “There are just simply not enough employees to handle all the demands for assistance by taxpayers.”

As to the matter of delayed tax refunds, Kelley noted that refunds “play a very important role in our country’s economic activity,” adding that “the looming significant disruption in our nation’s revenue stream is an unnecessary setback to financial recovery.”

A delayed start to the filing season is not the only hit impacting taxpayers this year; sequestration forced the IRS to shut down—for the first time in its history—virtually all of its functions for three full days during the summer months, followed by the 16-day government shutdown.

One impact: during the government shutdown, the IRS received 400,000 pieces of correspondence that could not be processed since fully 90 percent of the IRS workforce was sent home—and that workload came atop the one million items already being processed.

“The work of the IRS is too important to taxpayers and the effective functioning of government to be disrupted by budget cuts. NTEU is working in Congress to restore vital resources to the IRS and make future holiday seasons a little more merry,” President Kelley said.

NTEU is the nation’s largest independent federal union, representing 150,000 employees in 31 agencies and departments.