Newspaper article St Louis Post-Dispatch (MO)

Taxpayers to Feel IRS Pinch

Newspaper article St Louis Post-Dispatch (MO)

Taxpayers to Feel IRS Pinch

Article excerpt

You may think it's dandy to cut the budget of the Internal Revenue Service, as Congress recently proposed. The Senate would chop 6.4 percent from the IRS's fiscal '97 budget; the House wants 9.1 percent. Adjusted for inflation, the cuts are even deeper than that.

Hardest hit is the IRS's disappointing program for modernizing its computers. But there's also a slice off the budget for tax processing, taxpayer assistance and law enforcement. Fewer cases will be worked. Less delinquent tax will be corralled.

Hooray, say the tax-haters. Beat those revenooers down. But only the cheaters have cause to cheer. Honest taxpayers may find it harder to get booklets and forms, harder to get a question answered, harder to resolve a dispute. Even now, the IRS isn't delivering as much service as it used to, says tax attorney Karen Field of the consulting firm KPMG Peat Marwick. Whether it's a request for a private letter or a ruling on a compliance issue, "things that used to take six months now take a year," she says. The delays are holding up business transactions, such as acquisitions and mergers. When the deal can't wait, the parties have to guess what the IRS will rule. If they're wrong, it could cost them millions of dollars. Tom Ochsenschlager, a partner at the accounting firm Grant Thornton, has a client who needs a tax ruling on a new financial product. The IRS's national office told him it will take a year to find out. "The cuts that Congress has already made are slowing down commerce," Ochsenschlager says. The IRS has been streamlining operations to move more people into audits and collections, in order to bring more money in. For example, it has been moving faster to collect delinquent taxes. In 1992, it beefed up the number of field agents who investigate business returns. (Cash businesses appear to pay an average of 70 percent of their tax, compared with more than 95 percent for people subject to tax withholding.) The plan has been working. The rate of collections has increased. In 1995, Congress appropriated $400 million for what was intended to be a five-year compliance effort. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.