Sequester 'Will Slow Tax Refunds'

Income tax refunds will take longer to reach taxpayers if automatic government spending cuts go into effect as planned, experts warned Monday.

“Your refund checks are going to come later,” David Kendall of the Democratic think tank Third Way told Politico, noting that payments will also take longer to reach the Treasury.

“Filing your income taxes is a broad experience across the country and not a pleasant one for most people,” said Kendall. The sequester, he added, is “just going to make a bad experience even worse.”

And Floyd Williams, a senior tax counsel at Public Strategies Washington, said, “At a minimum, it’s probably going to take longer for people to get through on the phone; it’s going to take longer for refunds to be processed.”

The cash-strapped Internal Revenue Service is already operating on a reduced budget, having cut 10,000 employees from its staff of 91,000 over the past couple of years.

Last year, more than 115 million people called the IRS for help, with only 68 percent getting through after being kept on hold for an average of 17 minutes, according to Politico. And 1 million of the 10 million written inquiries mailed to the agency last year did not get a reply.

Experts also warn that the IRS will have fewer resources to root out fraud.

“The IRS would be forced to complete fewer tax return reviews and would experience a reduced capacity to detect and prevent fraud,” acting Treasury Secretary Neal Wolin wrote in a Feb. 7 letter to lawmakers.

Williams told Politico, “Any time there is a drop-off in enforcement, you’re going to see a growth in the so-called tax gap, which is the difference between what the government collects and what is rightfully owed.”

The automatic spending cuts, known as the sequester, would include a reduction of 8.2 percent in funding to the IRS. The cuts are due to go into effect Friday unless lawmakers can find a way to fend them off.

Mark Steber, the chief tax officer at Jackson Hewitt Tax Service, says anyone needing help should file early. “You’re going to have a much harder time after March 1,” he wrote in a Feb. 15 Huffington Post op-ed piece.