IRS Cut Millions in Taxpayer Services to Pay for Obamacare

The IRS' overloaded phone system hung up on more than 8 million taxpayers this filing season as the agency cut millions of dollars from taxpayer services.

For those who weren't disconnected, only 40 percent actually got through to a person. Many of those people had to wait on hold for more than 30 minutes, IRS Commissioner John Koskinen said Wednesday.

A new staff report by Republicans on the House Ways and Means Committee says the IRS diverted millions from taxpayer services and other areas to pay for President Barack Obama's health law.

At a hearing Wednesday, Koskinen blamed budget cuts approved by Congress. The agency's budget has been cut by $1.2 billion since 2010.

"Customer service, both on the phone and in person has been much far worse than anyone would want," Koskinen told a Ways and Means subcommittee. "It's simply a matter of not having enough people to answer the phones and provide service at our walk-in sites as a result of cuts to our budget."

Koskinen said the agency is required by law to implement the health law, leaving him with few other places to cut. He said the agency requested a total of $600 million over the past two years for computer upgrades to implement the health law as well as a new law requiring foreign banks to report information about U.S. account holders.

"In both years the Congress gave us zero dollars so we had no choice but to look elsewhere," Koskinen said.