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Sequestration could hurt IRS collections

Feb. 23, 2013 at 4:21 PM

WASHINGTON, Feb. 23 (UPI) -- The Internal Revenue Service, like the rest of the U.S. government, faces cuts if spending cuts known as the sequester kick in on schedule, tax analysts said.

The across-the-board cuts scheduled to take effect March 1 mean the IRS will have fewer employees to examine tax returns and taxpayers who try to get help from the agency will spend more time on hold. Those expecting refunds will have to wait longer for their checks, Politico reported Saturday.

The IRS has cut its workforce by 10,000 in the past two years through attrition. Taxpayer advocates and experts say the agency needs more staffers.

Floyd Williams, a longtime IRS employee who is currently senior counsel for the consulting firm Public Strategies Washington, said further cuts in staff hours or number of jobs because of the sequester will likely mean less revenue.

Fewer underpayments, whether accidental or on purpose, will be caught.

"Anytime there is a drop-off in enforcement, you're going to see a growth in the so-called tax gap, which is the difference between what the government collects and what is rightfully owed," he told Politico.

This year was already likely to be a difficult one because of changes in tax law, Politico said.

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