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The IRS is touting $1 billion in cost-cutting measures while cautioning about reductions in customer service and enforcement.

IRS Cuts $1 Billion, Warns of Reduced Service and Enforcement

  • 4/17/2013

IRS Cuts $1 Billion, Warns of Reduced Service and Enforcement

As the IRS prepares to operate under sequestration it is touting its cost-cutting measures, while at the same time cautioning about reductions in customer service and enforcement.

According to the IRS, it will realize $1 billion in budget savings and efficiencies between the start of fiscal year 2010 and the end of fiscal year 2013 from reductions in personnel, travel, training, office space, and other cost savings. However, continuing budgetary pressures could negatively impact customer service and enforcement, the agency warned.

Cost savings

Since fiscal year 2010, the IRS reported that it has taken several measures to reduce overall costs. Personnel costs were trimmed by offering buyouts and early outs to 7,000 employees in fiscal year 2012. According to the IRS, 1,244 employees accepted buyouts and early outs. Employee travel has also been curtailed.

Total full-time staffing declined by more than 8 percent over the last two years, representing about 8,000 positions, according to the IRS. Employee training has seen an $83 million reduction in the last two fiscal years. The agency has increasingly used video for training purposes.

The IRS also consolidated its office space in Washington, DC, and other locations. An office space and rent reduction initiative started in 2012 is expected to reduce total office space by more than 1 million square feet, the agency predicted. Forty-three smaller offices have been or will be closed. More employees are teleworking instead of commuting to IRS offices.

In addition, the IRS has moved from a paper environment to an electronic one. In fiscal year 2011, the agency stopped mailing paper tax forms to taxpayers at the beginning of the filing season.

Sequestration impact

The Budget Control Act of 2011 and subsequent legislation set in motion across-the-board spending cuts, cancelling $85 billion in budgetary resources for federal agencies effective March 1. The IRS reported that sequestration will reduce the agency’s budget by nearly $600 million for fiscal year 2013. Taxpayer services and enforcement are projected to be among the areas taking the largest cuts.

The IRS predicted that reduced funding will require employees to take between five and seven furlough days before the end of fiscal year 2013. It had previously announced that furloughs would not take place until after the end of the filing season. Subsequent comments by IRS officials have indicated furloughs may begin during the summer of 2013.

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