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Washington, D.C.—Continued budget cuts for the Internal Revenue Service (IRS) will have serious repercussions on the ability of the agency to carry out its revenue-collection mission, including its efforts to reduce the multi-billion-dollar gap between taxes owed and those paid.

That was the message delivered today in testimony submitted to the Senate Finance Committee by the leader of the union representing IRS employees.

“Despite the critical role the IRS plays in helping taxpayers meet their tax obligations and generating revenue to fund the government, the IRS’s ability to continue doing so has been severely challenged due to the lack of adequate funding” in the past two fiscal years, said President Colleen M. Kelley of the National Treasury Employees Union (NTEU). “The dangers associated with underfunding the IRS cannot be overstated,” she added.

For the current fiscal year, the IRS budget is $330 million less than that in fiscal 2010, resulting in a decline in IRS staffing of some 5,000 employees, Kelley told the committee.

The recently-concluded filing season showed the impact on taxpayers: delays in completing a phone call to the agency, lengthy delays in IRS responses to letters seeking to resolve tax issues; further delays not only to individual taxpayers but to small business owners trying to set up payment plans; and difficulties in taxpayers getting answers to their questions about deductions and credits in a complex tax code, among other issues.

The NTEU leader emphasized that these problems will only get worse over time, unless greater attention is paid to the funding and staffing needs of the IRS. She underscored the point by noting that in 1995, the agency had a staff of 114,064 to administer the tax laws and process 205 million tax returns. Today, she said, the IRS has just 90,711, yet must administer a more complicated tax code while processing some 236 million tax returns—many of them highly complex.

Pointing to the gap between taxes owed and those not paid on a timely basis, President Kelley said: “At a time when Congress is debating painful choices of program cuts and tax increases to address the federal budget deficit, we believe it makes sense to invest in one of the most effective deficit reduction tools: collecting revenue that is owed, but hasn’t yet been paid.” The IRS puts this ‘tax gap’ at some $450 billion annually.

She said NTEU supports the administration’s fiscal 2013 budget proposal for IRS funding of $12.76 billion in fiscal 2013—an increase of $945 million from the current fiscal year, noting that substantial portions of the proposed increase would address pressing needs in both enforcement and customer service efforts.

“In the current budget environment,” Kelley said, “it is critical that the IRS have the resources it needs to maximize taxpayer compliance, reduce the tax gap and generate critical revenue for the federal government.”

Among the programs funded in the president’s budget are a variety of compliance activities that would deepen and broaden the IRS’s focus on international tax compliance of high net worth individuals and entities. Combined with longer-term planned additional investments in these activities, the increased funding is expected to generate an additional $44 billion in tax revenue over the next 10 years.

At the same time, Kelley applauded the administration’s budget attention to customer service efforts, noting NTEU’s longstanding view that “helping taxpayers understand their tax reporting and payment obligations is the foundation of taxpayer compliance.”

NTEU is the nation’s largest independent union of federal workers, representing 150,000 employees in 31 agencies and departments.