Repeated congressional budget cuts have devastated the IRS — and it is only going to get worse, according to a new report.

Nina Olson, the national taxpayer advocate at the IRS, said in her annual report that the decline in service at the IRS is attributable mostly to 17 percent in total budget cuts since 2010. That has caused a gradual downward spiral in customer service standards and tax oversight duties, she said.

Congress passed legislation in December cutting another 3 percent of the IRS budget for fiscal 2015. Since 2010 the IRS budget has been cut by $1.2 billion and the agency has reduced its workforce by 13,000 employees.

The budget cuts are having an effect: In 2015 the agency might answer fewer than half of customer phone calls and respond to only half of written questions within 45 days, according to Olson. But call volume only continues to increase, leaving the agency unable to answer taxpayer questions.

Resource: Read the full report

"It is a challenge for any tax agency to properly administer a system such as the one we have. But it is impossible for an underfunded tax agency to do so," she said.

Congress must provide the agency with proper funding or risk a worsening series of problems and customer service shortages at the agency, Olson said. Lawmakers could boost funding for the agency while implementing strong oversight rules to prevent abuse and to channel funding properly, she said. That would help restore confidence in the agency, she added.

Colleen Kelley, the president of the National Treasury Employees Union, said in a statement the IRS budget now stands at its lowest level since fiscal 2007 even as taxpayers and responsibilities continue to increase.

" We will do everything we can to prevent these draconian cuts from resulting in hardship to frontline employees who provide vital services to taxpayers. Starving the IRS hurts more than just the agency's workforce, it hurts all taxpayers," Kelley said.

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