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8M phone calls unanswered as IRS cuts taxpayer service

Stephen Ohlemacher
Associated Press

Washington — 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 to help pay to enforce President Barack Obama's health law.

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

The number of disconnected callers spiked just as taxpayers were being hit with new requirements under the health law. Last year, the phone system dropped 360,000 calls, Koskinen said.

For the first time, taxpayers had to report whether they had health insurance last year on their tax returns. Those who received government subsidies had to respond whether they received the correct amount. People without insurance faced fines, collected by the IRS, if they did not qualify for an exemption.

A new staff report by Republicans on the House Ways and Means Committee criticized the agency's spending priorities. The report said the IRS diverted $134 million in user fees that had been spent on customer service last year to other areas this year.

"It looks to me like you're purposely harming taxpayers," Rep. Kristi Noem of South Dakota told Koskinen at a hearing Wednesday.

Koskinen said the user fees were spent on computer upgrades to implement the health law as well as a new law requiring foreign banks to report information about U.S. account holders.

He said budget cuts approved by Congress left him no choice. The agency's budget has been cut by $1.2 billion since 2010. It now stands at $10.9 billion.