If you thought the recent budget compromise would only hurt government funding, then prepare yourself: it might hurt your personal finances, too. On Dec. 18, the IRS announced that 2015 tax refunds will take longer to process ? and directly because of those cuts that Republicans demanded.
The $346 million reduction to its budget will result in fewer IRS employees, IRS Commission John Koskinen said at Thursday’s press conference. Because no overtime for current staff can be authorized, either, he pointed out, processing the average 140 million tax filings?will take much longer.
?Everybody’s return will get processed. But people have gotten very used to being able to file their return and quickly getting a refund. This year we may not have the resources, the people to provide refunds as quickly as we have in the past.?
Koskinen informed IRS staff of the circumstances directly by memo on the previous day. When adjusted for inflation, the agency had the lowest amount in operating budget since 1998, when IRS handled 30,000 fewer personal tax returns.
?This year we will have little choice but to do less with less.?
Of course, the delays only affect the lower-to-middle class who are eligible for partial or full tax refunds. However, that amounts to over 110 million Americans ? roughly 80 percent of all personal income tax filers. And this delay in refunds, which averaged over $3,100 per filer in 2014, could not only negatively affect those Americans, but even the national economy, too.
A 2014 survey by Edward Jones financial consultants found that 60 percent of tax refund recipients spend that money quickly, and on items ranging from clothing to entertainment to household expenses, even credit card debt. And with these delays in refunds, imposed by congressional Republicans, that amounts to over $200 billion in economic activity that will be postponed, if not denied.
Since 2010, IRS funding has been reduced by over $1 billion ? roughly 10 percent of its needed budget.
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