(Bloomberg) The Internal Revenue Service is closing the last of its overseas taxpayer-assistance centers, saying that years of budget cuts have forced it to end a popular program designed to help U.S. citizens living or traveling abroad.
The closing of IRS offices attached to U.S. Embassies in London and Paris, as well as the consulate in Frankfurt, will allow the agency to reassign about a dozen employees to its domestic offices and save about $4 million a year, the IRS said in a statement.
After workforce reductions at the IRS, Commissioner John Koskinen warned last month that refund checks may be delayed for millions of taxpayers this filing season.
For decades, the IRS has stationed employees in embassies and consulates around the globe to assist American expatriates with their tax issues and help inspect the foreign operations of U.S. companies in cases involving possible civil violations of tax code. In 1993, the IRS had staff members attached to more than a dozen embassies around the world, from Riyadh and Ottawa to Singapore and Caracas. By last year, that number was reduced to four, and in November the IRS closed its Beijing office.
“After budget reductions over the last four consecutive years, the IRS is forced to make tough choices during this period of fiscal austerity and these closures have relatively little impact on taxpayers and treaty partners,” said Julianne Breitbeil, an IRS spokeswoman.
Communications Advances
IRS officials said that technological advances in communication have made the overseas field offices expendable. They pledged to find more economical ways to assist American taxpayers living abroad and said that enforcement duties will be carried out by IRS employees from the U.S. Cases involving more allegations of criminal tax fraud are handled by the IRS Criminal Investigation unit, will not be affected by closing the overseas offices.
But union officials said budget cuts imposed on the IRS in recent years have hampered its ability to enforce the tax code and warned that the current move will ultimately cost the Treasury revenue.
“Tax cheats will find it easier to evade paying what they owe,” Colleen M. Kelley, president of the National Treasury Employees Union, said in a statement last week.
Funding for the IRS has been reduced in recent years, even as the agency has been given additional duties administering the federal health-care law. The IRS budget is $10.9 billion for the 2015 fiscal year, $1.2 billion smaller than in 2010. The number of full-time IRS employees has also dropped since then. It topped 94,000 in 2010 and has dropped below 83,000.
More than 6 million Americans live abroad, and are required to file an annual return. Unlike most other countries, the U.S. taxes citizens on income earned anywhere in the world, although the first $100,800 is exempt and taxpayers receive a credit for taxes paid to other countries.
