As Congress has been busy making cuts to administration spending, the Internal Revenue Service has faced a rise in identity theft and a number of tax-code changes meant to stimulate the economy.
The IRS continues to receive an ear-bashing from taxpayers who demand stricter rules forcing foreign financial institutions to report on U.S. account holders, and still has to handle the tax changes associated with President Barack Obama’s 2010 health-care law.
“IRS resources continue being stretched thin, and the current trend of decreased resources coupled with increased complexity worsens the problem,” the IRS Oversight Board said in the yearly report. “The board can’t forecast that a breaking point will occur, but a continuation of current trends increases the danger that the IRS will experience serious problems in the future.”
Identity theft is one of the most difficult burdens for the IRS. The amount of fake refund returns identified by the IRS has skyrocketed more than fourfold over 2 years, increasing to 2.18 million last year from 457,369 in 2009, according to the report. The IRS was able to prevent $14.4 billion dollars’ worth of fraudulent rebates in 2011, according to the report, but that left about $1.8 billion that still made it into the hands of thieves.
The IRS has increased the staff at a specified department that deals with identity theft, up by forty individuals to 440, according to the report. While it is necessary to aid the victims, the report announced that “such efforts take away IRS resources from other service functions” and present “a massive resource drain on the Internal Revenue Service staff.”
The abstract nature of the tax code and congressional utilization of the tax code to steer the economy are other problems the IRS is faced with.
“The tax administration system has been seriously tested in the last few years as the tax code has been employed at length to boost the economy and provide relief to taxpayers,” the IRS Oversight Board recounted.
United States citizens living abroad are also displeased with the IRS as it attempts to enforce the 2010 Foreign Account Tax Compliance Act, or Fatca.
“Criticism has been received from Americans living abroad who believe that the rules impose heavy compliance burdens on them,” the report declared.
IRS staff remain incentivized and committed, the report stated. However, only time will tell whether or not these problems are more than the service can handle.
While the IRS faces a unique set of problems, taxpayers are still burdened by wage garnishments, liens, levies and audits. If you are facing IRS tax problems, contact JG Tax Group today and speak to our staff about securing your financial future.