Department of Treasury

The Department of the Treasury (Treasury) reported that sequestration negatively affected many program areas such as Internal Revenue Service (IRS) customer service, tax enforcement, and municipal bond payments. In the years leading up to sequestration, Treasury officials said the agency implemented cost savings initiatives, which, along with the use of transfers and other funding flexibilities, helped it mitigate some of the effects on services to the public in fiscal year 2013. However, IRS reported that sequestration had an overall adverse effect on core taxpayer services. IRS’s level of customer service, for example, dropped in fiscal year 2013 due in part to resource constraints caused by sequestration. In addition, according to Treasury, sequestration cuts to the IRS enforcement budget account, along with transfers from this account to other IRS programs, will likely result in lost revenue due in part to fewer tax return reviews and diminished fraud detection. Treasury was also required to decrease direct payments to state and municipal bond issuers and others assisting low-income and disadvantaged communities.