Report: The IRS ‘absolutely needs more funding’ to deal with new tax law

As if it wasn’t already clear that the IRS faces challenges in implementing the new GOP tax law, a new report by the agency’s independent taxpayer advocate warns just how daunting a task the agency has on its hands.

The IRS will have to update its systems, publish new forms and publications, revise regulations, train employees on the new tax law and answer taxpayer questions about it. A preliminary estimate from before the tax law was passed put the IRS cost of implementation at $495 million over two years — at a time when budget cuts have already “challenged the agency’s ability to perform the basic tasks of administering the tax system.”

The report says that IRS funding has fallen about 20 percent in inflation-adjusted terms since 2010. Even before the new tax law was passed, the agency expected to be able to answer about 60 percent of public calls during tax season and 40 percent for the full year. Its employee-training budget has been cut by almost 75 percent since fiscal 2009.

RELATED: 13 states that tax Social Security income

15 PHOTOS
13 states that tax Social Security income
See Gallery
13 states that tax Social Security income

1. Colorado 

Photo credit: Getty

2. Connecticut 

Photo credit: Getty 

3. Kansas 

Photo credit: Getty 

4. Minnesota 

Photo credit: Getty 

5. Missouri 

Photo credit: Getty

6. Montana 

Photo credit: Getty 

7. Nebraska 

Photo credit: Getty

8. New Mexico 

Photo credit: Getty

9. North Dakota 

Photo credit: Getty 

10. Rhode Island 

Photo credit: Getty 

11. Utah 

Photo credit: Getty 

12. Vermont 

Photo credit: Getty

13. West Virginia 

Photo credit: Getty

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

Based on what happened following the 1986 tax reform and the 2008 stimulus, the new law will only add to the IRS workload.

“We have already seen confusion about withholding changes, confusion about the deductibility of prepaid property taxes, and confusion about whether states can allow taxpayers to make charitable contributions in lieu of taxes as a way of permitting their residents to claim larger tax deductions than would otherwise be allowed because of the new $10,000 cap on the state and local tax deduction,” National Taxpayer Advocate Nina Olson said. “The IRS will have a lot of issues to work through, and taxpayers will have a lot of questions. But with more funding, strong leadership, and a closer working relationship with Congress, I am convinced the IRS can do the job well.”

Whether the IRS gets additional funding remains a question. But Olson also wrote that the IRS has opportunities to improve even without more money. “Limited resources cannot be used as an all-purpose excuse for mediocrity,” she wrote.

Top Reads from The Fiscal Times

Tax Tips for Real Estate Agents and Brokers

Most real estate agents and brokers receive income in the form of commissions from sales transactions. You're generally not considered an employee under federal tax guidelines, but rather a self-employed sole proprietor, even if you're an agent or broker working for a real estate brokerage firm. This self-employed status allows you to deduct many of the expenses you incur in your real estate sales or property management activities. Careful record keeping and knowing your eligible write-offs are key to getting all of the tax deductions you're entitled to.

Read More

Brought to you by TurboTax.com

What is the Educator Expense Tax Deduction?

The Educator Expense Tax Deduction allows teachers and certain academic administrators to deduct a portion of the costs of technology, supplies, and certain training. Here’s what teachers need to know about taking the Educator Expense Deduction on their tax returns.

Read More

Brought to you by TurboTax.com

Self-Employed Less Than a Year? How to Do Your Taxes

Have you been self-employed less than a year? If you’re just starting out, it’s possible you worked at a job earlier in the tax year before making the switch to self-employment, or you’re working multiple jobs. In this case, you may have more than once source of income you’ll need to report on your income tax return.

Read More

Brought to you by TurboTax.com

Taxes for Grads: Do Scholarships Count as Taxable Income?

Heading off to college to broaden your horizons is exciting, but funding your education via scholarships? That's even better. Scholarships often provide a path to education that might not be feasible otherwise, which is why the Internal Revenue Service (IRS) can be generous in minimizing students' tax obligations. But sometimes scholarship money does count as income, and it’s better to find out now if your scholarship adds to your tax liability than to have a surprise later. Here’s how to decode your scholarship taxation.

Read More

Brought to you by TurboTax.com
Read Full Story
Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.