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Funding, staff cuts mean fewer criminal investigations for IRS

With just three days left until the tax return filing deadline, we know from experience that more than a few of Georgia's residents are scrambling to pull everything together. Some of them may have been sitting on hold with the IRS for the past few weeks -- we have written about budget cuts and staffing shortages in the past and the effect the cuts have had on customer service, among other things (check out our Jan. 19 post for an example).

Since 2010, the IRS budget has declined by $1 billion, and a new report from the Criminal Investigation Division suggests that customer service is not the only area to have suffered. The division lost 3 percent of its criminal investigators from 2013 to 2014, and the number continues to decline. Between September 2014 and February 2015, the division lost an additional 3 percent of its investigators.

With fewer investigators, the number of criminal investigations has also declined. According to the report, though, there were was 4,297 in 2014, about 19 percent fewer than 2013. (These numbers reflect October-to-September fiscal year activity, not calendar/tax year results.)

Still, it is hard to say whether that's good news or bad. For taxpayers, the glass is both half-full and half-empty.

The division investigates all kinds of criminal activity involving taxes. Certainly, there are tax fraud and suspicious refund cases, but the IRS also investigates identity theft cases, money laundering and other issues. Successful investigations save families and individuals a lot of money and a lot of trouble.

However, the budget and staffing cuts do not necessarily translate into the agency just glossing over suspected criminal activity among average individuals and families. It's important that no one cut corners or round numbers in the mistaken belief that the IRS is too busy with other, more important matters. The IRS has been teaming up with other agencies to prosecute some big cases, freeing its own staff to look at less dramatic problems.

Perhaps the glass really is just half-empty. The IRS hasn't the funding or personnel to pursue major scammers, but it is still making time to look into anomalies among individual returns.

Source: Accounting Today, "IRS Opened 19% Fewer Criminal Cases in 2014, Report Says," David Voreacos and Richard Rubin, April 7, 2015

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