John Koskinen stepped into his role as Commissioner of the IRS amid significant troubles for the agency, and many observers believe that the commissioner has handled his new role well. Specifically, many note that at a time of difficulty for the IRS, the commissioner boosted employee morale, having fought for employee bonuses, toured IRS facilities and conducted town hall meetings to address the concerns of Service personnel. Such an effect reflects Koskinen’s reputation as a turnaround artist, having worked for years in corporate restructuring and guided the federal government through the Y2K transition.

Despite the positive effects Koskinen has had on the Service, many believe the mountain of problems the IRS faces will limit the commissioner’s ability to truly revitalize the agency. This year will see increased implementation of the Affordable Care Act (ACA) and the Foreign Account Tax Compliance Act (FATCA), both complex laws that require significant resources to administer. And, despite the Service’s growing responsibilities, its current budget, at $10.9 billion, is $346 million less than last year’s. Additionally, the exempt organization controversy that erupted in the May 2013 continues to consume significant time and resources for the IRS.

Many fear that the Service will be less responsive to taxpayers as a result of its increased responsibilities and reduced budget. According to the most recent numbers, the IRS answers approximately 60% of calls for taxpayer assistance and Koskinen warns that the number may drop to 53% in 2015. Additionally, even if the IRS continues to answer 60% of its calls, it has fewer fully trained personnel to give comprehensive advice. Observers also note that the Office of Chief Counsel is short staffed and therefore will likely close fewer exams and issue less PLRs and other guidance. These are all serious concerns and many in the tax community will keep a close eye on how well Koskinen and the Service address them this year.