Sequester May Hurt IRS Collection Efforts

The head of the Internal Revenue Service is warning that the government-wide spending cuts that took effect last month could hurt federal tax collections.

IRS Acting Commissioner Steven Miller said, during testimony before a House Ways and Means subcommittee, the sequester could reduce the amount of enforcement revenue the agency brings to federal coffers, although he did not provide a dollar amount.

Miller has told IRS employees that they will be furloughed for 5 – 7 days this year, but that those days off will not begin until summer to process the tax returns received by April 15.

IRS enforcement activities netted more than $50 billion in 2012 and avoided more than $20 billion in payments related to fraudulent returns, according to the agency’s estimates.

The IRS has told lawmakers it could miss out on “billions of dollars” in potential collections because of the cuts, according to Rep. Jose Serrano (D-N.Y.), who spoke about the issue.

The sequester requires the IRS to reduce its spending by $600 million this fiscal year. President Obama’s 2014 budget calls for ending the sequester and boosting the IRS budget, which has stood at $11.8 billion for the past two years, by $1 billion.