IRS warns of possible shutdown

By RACHAEL BADE

12/18/14 3:30 PM EST

Updated 12/18/14 4:49 PM EST

The IRS is considering its own temporary shutdown due to recent budget cuts enacted by Congress, its chief said Thursday.

IRS Commissioner John Koskinen said furloughs — forced unpaid days off for employees as part of an IRS closure — is one idea reluctantly being tossed about to save money, though they are hoping they will not have to go there.

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“People call it furloughs; I view it as: Are we going to have to shut the place down? And at this point, that will be the last thing we do, … but there is no way we can say right now that that wont happen,” Koskinen told reporters at a Thursday press conference on the upcoming tax season. “Again, I would stress that would be the last option.”

(Also on POLITICO: IRS to freeze hiring, cut enforcement)

He said a shutdown would mean the IRS would “close the agency for a day, two days, whatever days it would take to close the gap that we can’t otherwise close in a reasonable way.”

The agency estimates each closed day would save $29 million.

The news comes a day after Koskinen in an email warned IRS employees that overtime would be suspended and a hiring freeze enacted. He also said more tough news would likely follow as IRS leadership negotiates with the National Treasury Employees Union, particularly because personnel costs comprise about 75 percent of the IRS costs.

In the recent budget deal, Congress cut the IRS budget by $346 million to $10.9 billion — $1.5 billion less than the administration asked for. The IRS’ budget has been reduced about $1 billion since 2010.

(Also on POLITICO: Republicans seek to cripple IRS)

The agency was one of the only agencies that got a cut this year — despite the storm of a tax season looming on the horizon. The IRS will be implementing Obamacare tax credits and penalties for the first time as well as a new tax evasion law.

But Koskinen said his current budget challenge is made worse by a mandated one percent federal employee increase it must abide by.

“It’s not just the $350 million cut in the budget; it’s the fact that we have $250 million in new expenses for a government-wide pay raise. … So we really have a $600 million hole this year,” he said.

Koskinen took over the agency after it faced big criticism following the controversy over added scrutiny given to tea party groups seeking tax-exempt status. Republicans, never a fan of the IRS, have sought to cut its budget further ever since. They’ve also been critical of the IRS paying out bonuses this year, and still mention lavish conferences the IRS hosted several years back.

Since then, the IRS has cut its training budget by more than 85 percent, according to the National Taxpayer Advocate, which is anticipating more trouble due to budget cuts.

Koskinen says there is no more fat to cut at the IRS.

Read more: http://www.politico.com/story/2014/12/irs-possible-temporary-shutdown-113681.html#ixzz3MHyx8dTt