WASHINGTON — This is shaping up as an ugly tax season. It is not the year to procrastinate. Start gathering your stuff now, and file early and electronically.
The Internal Revenue Service, which brings in the dollars to fund the government, keeps having its budget slashed — so much so that its commissioner is openly pessimistic about the prospects for helping taxpayers, many of whom are already afraid to call for assistance, especially if they owe money. The way Congress has been handling funding for the IRS, it’s as if it wants us to hate the agency.
Tell me how this makes sense. Congress passed a $10.9 billion budget for the IRS, the lowest level of funding since 2008 and the lowest since 1998 if you factor in inflation, Commissioner John A. Koskinen said in a memo to staff.
Officials are anticipating long wait times on the agency’s toll-free help line. Expect to be on hold for as long as 30 minutes or more, Koskinen said.
Last year, 35.6 percent of phone calls went unanswered by customer service representatives, according to a report to Congress by the national taxpayer advocate, Nina E. Olson.
At a news conference, Koskinen was blunt: “I would caution taxpayers to use our phone lines only as a last resort.”
As a taxpayer, here are some of the things that concern me:
■ Less outside contractor support for big projects.
“This means that new taxpayer protections against identity theft will be delayed,” Koskinen said. The Taxpayer Advocate Service won’t be able to obtain a new system to oversee taxpayer hardship cases.
■ Fewer audits.
Given the size of the federal deficit, you would think collecting as much revenue as possible would be a high priority. Yet the IRS cuts will result in fewer individual and business audits. The commissioner said there’s a hiring freeze, resulting in the loss of about 1,800 enforcement personnel. Fewer staffers for this year means the IRS will collect $2 billion less in revenue, Koskinen said.
But if you think it’s open season for cheating, think again. “Even with the cuts, we still do one million audits. It’s like a roulette spin, and the white ball may fall on your number.”
■ Cuts in overtime hours.
Sure, if you have less money, you cut back overtime pay. But we all know how complicated the tax code is. Do we really want a situation in which people can’t easily get in touch with the IRS, or there’s a delay in getting refunds because staff are not allowed to work as long as possible to resolve issues?
Koskinen said that taxpayers filing paper tax returns may have to wait an extra week or more to get a refund. It already takes six to eight weeks to receive a refund if you file a paper return. It’s much shorter if you file electronically and have your refund sent directly to your bank account. Electronic refunds process within 21 days.
Complicating matters is the Affordable Care Act, or ACA. This year, for the first time, some people will have to reconcile subsidies they received to help pay for insurance they signed up for through the health care exchanges.
If you received a tax credit, you’ll need information from IRS form 1095-A, Health Insurance Marketplace Statement, which will come from the marketplace. Koskinen said to wait until you get the form before filing.
The majority of taxpayers with workplace health insurance or other qualified coverage won’t have to worry, because all they have to do is check a box on their return to verify they have health insurance. Because of the ACA, most taxpayers will have to indicate on their returns that each member of the family has qualifying health coverage.
If you have questions about the ACA, the IRS has a special section at IRS.gov/ACA. Look for “individuals and families.”
As Olson sums it up in her report: “When the IRS does not answer the calls its taxpayers are making to it, and when it does not timely read and respond to the letters its taxpayers are sending it, the tax system goes into a downward spiral. Taxpayers do not get answers to their questions, so they must either pay for advice they would otherwise obtain for free, or they proceed without any advice at all, leading to future compliance problems.”
Michelle Singletary can be reached at michelle.singletary