Budget Cuts Scale Back IRS Collections

Not everyone files their taxes on time and some neglect (or outright refuse) to pay at all. The IRS’s ability to pursue those individuals and companies has been drastically hampered in recent years. Now, not filing taxes is against the law and, sooner or later, those offenders will be caught. However, due to significant cutbacks in the IRS budget, the Automated Substitute for Return (ASFR) Program has been all but disabled. This program collected over $3 billion in delinquent taxes between June 2010 and July 2011. The program was scaled back, and the same period between 2015 and 2016 only brought in $430 million. That’s about an 86% drop in just a few years. Not insignificant.

Here is the Treasury Inspector General of Tax Administration audit from the treasury.gov website. It is quite extensive, but don’t worry – there is a Highlights page at the front.

“The Automated Substitute for Return (AFSR) program is a component of our collection strategy to promote filing compliance,” wrote Mary Beth Murphy, commissioner of the IRS’s Small Business/Self-Employed Division, in response to the report. “Attempting to bring noncompliant taxpayers into compliance ensures fairness and reduces the burden on taxpayers who fully pay their taxes on time. Resource constraints have forced us to make difficult decisions with respect to some of our programs, even those that provide clear benefits to tax administration. Because a non-filer strategy is important to our mission, we are currently working to develop one that fits within the current and future IRS operating environment, requiring fewer human resources, while providing an opportunity for us to achieve our desired outcomes.”

Not having money up front to pay for their tax preparation fees is a major reason for delinquent and failure to file taxes. Help your clients bridge the gap with a Refund Transfer from EPS Financial. Contact us today for details on how we can help you service more people in your community.

—Steven Schmid, National Account Manager