IRS: Understaffed and Outgunned & What That Means To You

In its June 5th, 2012 report, the government overseer to the IRS reported that unless changes were made soon, the IRS could face "serious problems in the future." While a lack of revenue officers might result in a little extra time for taxpayers who have an IRS debt to negotiate with the IRS before collections are taken, that scenario will only happen by chance. So what are the "serious problems" the overseer was referencing?

With new tax laws in place to spur the economy, from President Obama's Health Law to the extension of the Bush tax cuts, the IRS has seen some pretty big changes to the tax code. However, the IRS is severely understaffed and has been unable to cope with the new roles it has had to take in the last few years, including making basic math corrections to taxpayers' forms or taking First-Time Homebuyer tax credit requests.

The increased complexity of the tax code, paired with a lack of manpower has caused the IRS to be unable to process tax returns in a timely fashion (remember 2011?), putting a burden on taxpayers who need their refunds to pay bills, take trips, and basically keep the economy going.

Also, the IRS does not have sufficient manpower to effectively pursue tax cons that file erroneous tax returns and collect billions every year. In 2011, the IRS successfully prevented $14.4 billion worth of fraudulent tax return filings, but there were still $1.8 billion that managed to squeak through undetected. This is a serious issue that could affect any taxpaying American.

Identity theft involving taxes has increased every year, and by big numbers! In 2009, there were 457,369 identity theft claims, jumping to 2.18 million in 2010. The IRS processed more than 142 million tax returns per year, refunding more than $328 billion to over 109 million taxpayers; there are bound to be some that fall through the cracks. And while the IRS has beefed up its special identity theft unit by 40 people for a 440 person staff, taxpayers need to take preventative measures and not rely on the IRS to stop any fraudulent activity due to its lack of resources.

As always, I am the IRS Hitman brining you the need-to-know tax news. If you are experiencing a tax debt and want help, don't go to the IRS. Give me a call at 888-415-1337 or fill out the submission form for a free, no-obligation consultation on what you need to do to survive the IRS.

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