IRS admits agency-wide failures, asks lawmakers for money to make it better

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IRS facing new criticism over spending habits

Brad Blakeman and Joe Lestingi on new calls for reform

Despite claims that the IRS blew millions of dollars on “decorative” items like pricey exercise equipment, toy footballs and kazoos, the tax agency’s chief John Koskinen was back on Capitol Hill Wednesday making his case for even more money.

Koskinen testified before the Senate Homeland Security and Government Affairs Committee, that budget cuts have stripped the agency from being able to effectively help taxpayers. He said the lack of funding has led to longer waits for taxpayers turning to IRS help centers.

“Customer service, both on the phone and in person, has been far worse than anyone would want,” he said. “It’s a simple matter of not having enough people to answer the phones and provide service at our walk in sites, as a result of the cuts to our budget.”

Koskinen said the agency was “dismayed” by reports of taxpayers lining up outside help centers for hours before they opened up in order to get service.

“Taxpayers who have called us have had long wait times on the phones,” he said. “On bad days, fewer than 40 percent of the calls were able to reach a live assistor – and that was after a 30-minute wait or longer.”

The IRS has taken big budget hits in recent years. So far, $1.2 billion has been cut from the budget which has affected 13,000 employees. The cuts have also resulted in the agency’s ability to close audits and start criminal investigations.

Senate Finance Committee Chairman Orrin Hatch, R-Utah, sent a letter letter to Koskinen Tuesday, asking the agency to explain several questionable spending items.

The IRS has been criticized for spending sprees that date back several years including $4.3 million on “market research,” $8,000 on a stair climber and $4 million on office furniture for managers.

Thousands of dollars were also spent on “decorative and give-away items” such as bathtub toy boats, Thomas the Tank Engine rubber wristbands and kazoos.

In his letter, Hatch questioned the IRS’ ability to prioritize the use of its budget and offered some “courtesy suggestions” on ways spending could be curtailed.

“Stop giving paid vacation days to employees with serious conduct issues, including those owing back taxes; stop spending millions of dollars on organized labor activity in Fiscal Year 2013; and spend less money and employee time trying to regulate the free speech of Americans through the forthcoming IRS political activity rules,” Hatch wrote.

During the hearing, Sen. Claire McCaskill, D-Mo., suggested the reason customer service is lagging is because Congress decided to cut the agency’s budget to punish it in light of the targeting scandal, but in doing so, it backfired and hurt taxpayers.

Fox News' Kara Rowland contributed to this report.