Confused taxpayers, jammed help lines and tax cheaters running rampant — the IRS for months has warned that drastic budget cuts will disable an already troubled agency.

Republicans aren’t buying it.


Instead, they’re biding their time until they seize control of both chambers next year, giving them majorities to financially gut the most hated government agencies and new leverage to get agencies to do what they want.

A top priority? Crippling IRS regulatory actions, from Obamacare’s individual mandate to the looming draft rule that will limit political activities of groups like Crossroads GPS. The Environmental Protection Agency and the Department of Health and Human Services are among the others in the cross hairs.

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“We need to push back on the regulatory overreach of this administration across the board, whether that’s the IRS, the EPA or any other agency,” said Sen. Ron Johnson (R-Wis.). “The power of the purse is the greatest lever of power Congress holds.”

With seemingly little pushback from Democrats, the GOP this week secured $350 million in IRS budget cuts into the “cromnibus,” just weeks before one of the toughest tax seasons starts. The cuts to the IRS — and the larger negotiations on the year-end spending bill — offer a sneak peek at what Republicans plan to do when they are able to dominate government spending decisions.

IRS watchers warn that the agency is spiraling toward a rocky future that will rival some of its darkest days in its history, when whistleblowers blew the lid off IRS agents abusing power and thousands of tax returns were lost in the mail.

“Unless we are able to correct this, very bad things will happen to taxpayers,” said National Taxpayer Advocate Nina Olson at a November tax preparer conference — over a month before the latest budget cuts even came to light.

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Spending negotiators this week froze most agency budgets but reduced the IRS funds to $10.9 billion, a 3 percent cut over last year and $1.5 billion below the president’s request. Appropriators bragged in a release that the level is even lower than the IRS’s 2008 budget.

Those new cuts come atop more than a $1 billion reduction to the IRS budget since 2010, which has forced the tax-collecting agency to shed 13,000 employees while it serves an additional 7 million taxpayers, according to IRS Commissioner John Koskinen.

Those reductions are about to manifest in what Olson is predicting will be the “worst filing season” in years. For the first time, the agency will be administering Obamacare and another massive international tax law.

Even before the new cuts, the IRS was warning that half of taxpayers who call the IRS for help wouldn’t get through as a result of limited resources to IRS call centers this tax season.

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But the warnings are falling on deaf ears on Capitol Hill. Republicans are still seething over the IRS tea party targeting scandal, reports of lavish IRS conferences and spending on silly “Star Trek” training videos several years ago.

Earlier this year, House Republicans passed a whopping $1 billion cut to the IRS budget.

That should foreshadow what’s to come.

Rep.-turned Sen.-elect James Lankford (R-Okla.) said Republicans should use spending cuts to force information out of agencies that are less forthcoming with congressional investigators. He called out the IRS and EPA specifically.

“We’re just trying to say to them, ‘Look, do the things you’re supposed to do and stop wasting money on conferences and breaking rules,” said Rep. Ander Crenshaw (R-Fla.), the financial services subcommittee chairman who oversees the IRS budgetary process.

But Republicans and the IRS have very different views on what the agency is “supposed” to do.

For example, Republicans next Congress want to bar the IRS from implementing the Affordable Care Act, which relies on the IRS to oversee the tax credits and penalties for the uninsured. They might try to block the IRS from using any money to work on these issues, tripping up the program.

Another top priority: rules for politically active nonprofits, known as social welfare organizations. The IRS early in 2015 is expected to release a draft rule to clarify how much political activity these 501(c)(4) groups can legally engage in while keeping their tax-exempt status. Republicans, who prefer laxer campaign-finance rules, say the rule inherently infringes on freedom of speech; the IRS says it just makes its job easier.

“I told the commissioner he’s spending a lot of time and energy and money writing a rule that a lot of people believe violates the constitutional rights of the American people. Start doing things you ought to be doing,” Crenshaw said.

Rep. Peter Roskam, the new Ways and Means oversight chair, said Republicans could potentially write a rider to stop the IRS from enforcing that rule, too. He thinks the IRS is exaggerating its budget situation.

“This is an agency that [had the] wherewithal to make mock videos and to have lavish gatherings,” he said, referring to reports of abuse of funds from several years ago. “I don’t think it’s credible for them to say they don’t have enough. “

Senate Democrats this year made Republicans drop a spending bill policy rider to bar the IRS from writing the pending c(4) rule — but those Democrats won’t have such leverage next time around.

Democrats are bracing for the onslaught.

Rep. José Serrano of New York, the ranking Democrat on the appropriations subcommittee on the IRS, seemed almost proud that Democrats were able to limit GOP cuts to $350 million, saying it “could have been worse.”

He’s particularly worried about next year: “We’re just going to be trying to make their pain less painful.”

The looming crackdown is a huge blow to Koskinen, who sought to restore trust in the agency — and its budget — after the tea party controversy.

“Right now, the problem is trying to figure out how to survive with the constraints we are under and the obligations we have,” he told a crowd of tax preparers in November.

Experts watching the IRS say he’s right that further cuts will spill over to the taxpayer.

I worry about some spectacular implosion at some point in the indeterminate yet not too distant future.

“I worry about some spectacular implosion at some point in the indeterminate yet not too distant future,” said Robert Kerr of the National Association of Enrolled Agents.

One of the first things that goes when money gets tight at the IRS is taxpayer service — namely because the IRS’s chief obligation is to process returns and carry out law changes.

Even before the new cuts, the IRS was predicting only 53 percent of taxpayers who call for help would get through to an IRS agent during the 2015 tax season after an average wait of 34 minutes — the other half would be left to fend for themselves because of budget tightening.

For tax practitioners, it’s even worse. On the practitioner “priority” hotline, a number tax preparers call for help with their clients, the average wait is expected to be 52 minutes.

Troy Lewis, the American Institute of CPA’s tax executive committee chair, said he recently waited an hour and 10 minutes for help and has developed a routine when calling the IRS: use the bathroom and grab an hour or two-hour project you can do while waiting. It’s becoming something of a grim joke in the taxpayer community.

But the problem is serious, he says: “Although there can be some good that comes from fiscal tightening, in the end, if there are service restraints, those come out and manifest themselves through the taxpayers and tax practitioners, because they’re the ones that have to deal with the shortfall.”

Other experts are worried about enforcement. The most recent budget cuts specifically apply in part to enforcement, which is charged with going after tax cheaters.

But the GOP says the IRS can do more and is choosing not to, instead paying employees bonuses — a sore spot for the GOP.

“They tell me they’re outraged they can only answer 53 percent of the calls; I tell them I’m outraged they just paid [millions] in bonuses to people, some of them who owe back taxes — get your priorities right,” Crenshaw said.

He was referring to recent bonuses the commissioner paid out to some IRS employees in hopes of improving employee morale and rewarding good work.

Koskinen is likely to hear more remarks like these over the next year as the IRS is pushed to the brink to do more with what money it has. But as Koskinen said a few weeks ago, it won’t be pretty: “As well as we can is still going to be miserable.”