The government is set to reduce the allocation for the IRS in the budget, a move that the IRS warns could cost the country billions of dollars in lost taxes. The move to cut hundreds of millions of dollars from the IRS budget could in turn result in a severe reduction of IRS services to taxpayers and cost up to $4 billion in lost revenue annually, according to IRS Commissioner Doug Shulman. Shulman issued a letter to lawmakers in which he said the budget cuts “would lead to noticeable degradation of both service and enforcement and would have a serious detrimental impact on voluntary compliance for years to come.”
At a time when the annual budget deficit has reached its highest ever level of $1.3 trillion, the government is searching for ways to reduce costs.
The IRS was allotted $11.5 billion through a bill passed by the House Appropriations Committee for the fiscal year 2012, which started October 1. The amount was $600 million less than the allocation last year and $1.8 billion less than what President Obama asked for. On the other hand, The Senate Appropriations Committee version of the bill would provide $11.7 billion.
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