IRS budget cuts a double-edged sword for taxpayers

After hearing the news late last year that Congress had slashed the IRS’ budget, it surely crossed the minds of many of our readers that a tightened budget will mean that the agency will have fewer resources to conduct audits.

Audits are already quite rare, with 99 percent of federal income tax returns going unaudited. And the IRS admitted that it would be doing even fewer audits, meaning that they could be more rare than ever.

But readers should remember that audits are not going away entirely, so there is still a chance that they or their business could be audited. Ironically, if that does occur, the experience could be even more difficult than it was before, due to the same budget cuts that made an audit less likely.

One way the IRS has reacted to its financial problems is to reduce its customer service. One organization reported that 35 percent of calls to the IRS were not even answered. Other times, taxpayers were forced to wait on hold for a long time to get their questions answered. Even writing has become a hassle, with half of correspondence reportedly not being answered by the agency within reasonable time.

Thus, matters that might once have been settled with relatively little fuss might now take more time and effort to resolve. It is arguably more important than ever for taxpayers and small business owners to enlist the help of a tax attorney to help when a letter from the IRS (eventually) arrives in the mail.

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