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Regulation and Compliance > Federal Regulation > IRS

IRS Budget Cut Opens Door for Cyberattacks, Tax Cheats: Sen. Wyden

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Senate Finance Committee Ranking Member Ron Wyden, D-Ore., told IRS Commissioner John Koskinen in a Tuesday letter to tell him by Oct. 2 how a large budget cut could hamper the agency’s ability to crack down on tax cheats and would likely leave it vulnerable to cyberattacks targeting taxpayer data.

The fiscal 2016 Financial Services & General Government Appropriations bill proposes a $470 million cut to the IRS’ budget, while also increasing taxpayer services by $90 million, which means the IRS must absorb $560 million in cuts in the agency’s other “mission-critical areas,” Wyden wrote.

A smaller budget likely means the IRS will cut enforcement spending and perform fewer audits, which Wyden said “will embolden tax cheats and increase deficits, heaping a new burden onto the backs of honest taxpayers.”

Congress returns from its August recess on Sept. 8. Lawmakers are supposed to pass all twelve appropriations bills to fund the federal government by Oct. 1, when the new fiscal year begins, but history has proven this often doesn’t happen.

In the bill, the IRS receives $10.1 billion, $838 million below the fiscal 2015 enacted level and $2.8 billion below the president’s budget request.

Wyden also told Koskinen that cutting the funding that could be used to modernize the IRS’ 1960s-era IT systems “makes it easier for fraudsters to steal taxpayers’ identities or hack into IRS computers.”

“Congress ought to increase resources to the IRS if it expects the agency to bring its antiquated computer systems into the 21st century to prevent these criminal attacks going forward,” he continued. “Cutting resources to the IRS and similarly affected government agencies could essentially hand tax cheats and foreign crime syndicates the financial keys to the country.”

Wyden cited National Taxpayer Advocate data, which states that the IRS budget was reduced by 17%, after adjusting for inflation, between fiscal 2010 and fiscal 2015.

“A further cut of nearly $350 million was made in December 2014, and an appropriations proposal for FY 2016 would cut nearly $500 million more, while increasing the agency’s service workload,” Wyden argued.

Wyden noted that congressional appropriators have recommended increasing spending for the Department of Homeland Security and the Office of Personnel Management as a result of cyberattacks that hit these executive branches over the past year.

“Shouldn’t the resources made available to the IRS be similarly increased in response to cyber threats?” Wyden said.


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