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Washington, D.C.—A report by the Treasury Department inspector general about the substantial gap between taxes owed and those paid on a timely basis—the $450 billion annual ‘tax gap’—sharply underscores the dangers inherent in failing to provide sufficient funding and staffing for the Internal Revenue Service (IRS).

That was the message today from President Colleen M. Kelley of the National Treasury Employees Union (NTEU), which represents the IRS workforce.

“Over the past two years, the IRS budget has been cut by almost $1 billion,” Kelley said, adding that funding restrictions have forced the agency to operate under an exceptions-only hiring freeze. Further, the IRS workforce has been cut by 8,000 full-time, permanent employees since the end of fiscal 2010, more than 5,000 of whom are frontline enforcement employees, she noted.

“This is the reverse of what we should be doing,” President Kelley said. “The IRS cannot be expected to meaningfully cut into the tax gap with insufficient resources already putting a strain on its ability to perform its core mission.”

In its report, the Treasury Inspector General for Tax Administration (TIGTA) offered a variety of recommendations on how the IRS could more accurately estimate the tax gap number, including developing the capability to estimate the tax gap for the so-called ‘informal economy’ as well as for offshore tax evasion.

President Kelley noted that TIGTA’s recommended changes, with which the IRS agreed, would of necessity have to be accompanied by reasonable budget increases for the agency or risk leaving the IRS with limited ability to address the key elements of the tax gap.

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