Budget cuts will not require the IRS to shut down for two days after all, IRS Commissioner John Koskinen said Wednesday. 

Koskinen had warned in January that spending reductions could force a temporary shutdown later this year, resulting in unpaid furloughs for employees and service cuts for taxpayers. 

On Wednesday, Koskinen said in a message to employees that furloughs will not be necessary. He said the agency has been able to reduce costs in other ways, including a stricter limit on new hiring. 

The announcement comes as millions of Americans prepare and file their tax returns ahead of the April 15 deadline. 

"Even though we've had to do less with less, so far filing season has been running about as smoothly as we could hope, thanks to the dedicated work of IRS employees," Koskinen said. "Through March 13, the IRS has already processed more than 72 million individual returns. At the same time, you and your colleagues have been able to maintain critical IT systems and focus on key enforcement efforts." 

Separately, Koskinen told a congressional hearing Wednesday that budget cuts are still hurting enforcement and taxpayer services. 

Congress has cut the agency's budget by $1.2 billion since 2010. The IRS will receive $10.9 billion for the budget year that ends in September. 

President Barack Obama has proposed a $12.9 billion budget for the IRS in the coming budget year -- about an 18 percent increase. The proposal, however, has not been well-received by Republicans who control Congress. 

"The threat (of furloughs) will return in the future unless Congress increases the IRS budget and allows the agency to hire enough staff to execute its mission," said Colleen M. Kelley, national president of the National Treasury Employees Union. "Furloughs would have devastated morale among IRS employees. As it is, employees are frustrated that they cannot help taxpayers like they used to before and taxpayers are not getting the assistance they need from the IRS."