IRS Budget Cuts Hurt Low-Income And Elderly Taxpayers

Alert, tax prep procrastinators: You might want to force yourself to start earlier this year.

When the federal agency in charge of tax collection gets hit with budget cuts, there are problems – and reduced IRS services are creating real roadblocks.

IRS commissioner John Koskinen warned in December that this year would be tough for taxpayers because cuts mandated by Congress have hit the agency five years in a row. He said there would be delays in handling returns.

Now, tax season is in full force, and he was right. Take 78-year-old Susan Dean, who doesn't own a cell phone or a computer. For tax prep, she has her routine down. In January, she began like she always does, by setting up a special card table for her documents. In her subtle Southern accent, she explains: “Then, I just had to go pick up the new form which I’ve been doing really for 30-some years.”

So she went to the library, like usual. “I was kind of shocked to see the sign on the post, saying ‘due to cuts in federal funding, the IRS will not be sending out paper and the instruction booklet and all of the forms this year.'"

The booklet is key. Dean could have the library staff help her print the forms but not a 50-page instruction booklet.

The sign did direct her to an 800 number, though. “Seeing that, I hurried home, ‘hmmm,’ and tried to call the number.” It wasn’t easy. She only got a recording that told her to try again later. “Frustration on two sides here,” she says.

The IRS commissioner also warned about that: Long wait times when trying to call. Half or possibly less of the people calling IRS customer service this year are getting through.

Eventually, Dean did manage to order her forms through a special 800 number set up just for that. It's 1-800-TAX-FORM, but beware, it may already be too late to get them that way.

Yuri Kim manages a free tax prep program for United Way of King County. “When your option is to try to do it online or try to download the forms or try to request it - that is a huge barrier. For most people, it's no big deal, but for the people who are looking for these forms? It becomes a big deal.”

Kim believes the IRS cuts hurt the low-income and elderly population the most.

The forms are actually only a tiny part of the problem.

At the Seattle Public Library, one of the locations where Kim's volunteers prepare taxes, Nancy Williams wears a bright blue T-shirt that says “tax volunteer” on it. She’s going through a client’s documents. “OK, let’s start with your social security card and your ID.”

More pairs of volunteers and clients are scattered at tables along a closed off section of the library. They’re all speaking quietly while the tax preparers enter data on laptops. The IRS helps funds programs like these.

United Way didn’t lose its IRS funding, but Kim says his job IS more difficult this year. “While we are continuing to see the grant, they are basically asking us to do a lot more with the same number of dollars.” That’s because the IRS used to offer free tax prep for poor taxpayers, too, just like United Way. But no longer.

Are there any solutions?

“I don’t know," Kim says. "Honestly, I think it’s tough. To be frank, I understand that the IRS has to make cuts and this seems like a way to make cuts but it does put this population in a tougher situation than they probably have been in the past.”

He says United Way is also expanding and opening more locations where people can get help.

The forms finally arrived at Susan Dean’s house, but it took six weeks. But no matter, Dean had already found a way to do her taxes by hand. An IRS taxpayer assistance center in downtown Tacoma had the forms. Dean filled them out and filed her taxes, so she’s fine now, except for the fact that she is very concerned about everyone else. “I want people to know, guess what, the way it’s always been isn’t going to be that way this year!”

To sum up, here are a few of the changes: if you’re in the low-income bracket, there are free services available, but fewer of them; tax forms are no longer widely distributed; the IRS call center is ill-equipped to handle taxpayer calls.

And one more thing: The IRS says refunds will come back slower this year.