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Washington, D.C. —A report released today by an independent voice within the Internal Revenue Service (IRS) reiterated and supported the calls by the National Treasury Employees Union (NTEU) to provide the agency with the funding it needs to collect the nation’s revenue and address the tax gap. The mid-year report by National Taxpayer Advocate Nina E. Olson to Congress warns of the negative impact proposed IRS budget cuts would have on taxpayer services and tax compliance.

“The independent taxpayer advocate has warned Congress that proposed budget cuts will have a detrimental impact on the IRS’s ability to narrow the tax gap and reduce the deficit,” said NTEU President Colleen M. Kelley, who submitted testimony to Senate Appropriations Subcommittee on Financial Services and General Government on June 8.

The taxpayer advocate sees many of the same risks in proposed IRS budget cuts as does NTEU and laid out to Congress how that will negatively impact the ordinary taxpayer.

“In recent years, the IRS has been given more and more tasks, but it is not receiving the resources it needs to fulfill these tasks without cutting corners,” Olson reported. “And when the IRS cuts corners, taxpayers can be harmed and revenue collection may suffer.”

The report also noted that the tax gap—the amount of tax due but not paid voluntarily and timely—is estimated to be about $345 billion a year, and there needs to be investment to address that loss of revenue. Moreover, the IRS collected $194 in federal revenue for each dollar it spent in fiscal 2010.

“Spending cuts mean the IRS will not have the resources to ensure that all taxpayers pay their fair share, thereby effectively forcing compliant taxpayers to pay more to subsidize noncompliance by others. Moreover, the IRS will not have the ability to meet the service needs of the taxpayers who are paying our nation’s bills,” the report states.

“It simply makes no sense to slash the budget of the agency that generates 93 percent of the government’s revenue at a time when reducing the deficit is a national priority,” Kelley said.

In her Senate testimony, Kelley specifically cited the impact on taxpayer services. She noted that, in 2010, more than 6.4 million taxpayers visited the 401 IRS Taxpayer Assistance Centers across the country, a three percent increase over the previous year. However, the proposed cuts would severely reduce those vital services.

“The budget cuts proposed in the House of Representatives would result in the loss of more than 4,000 jobs at IRS, seriously impacting its ability to collect the essential revenue the government needs to serve the public and address our deficit,” Kelley said. “In the end, the proposed budget would actually end up costing money with the loss of $4 billion annually.”

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