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"The government is forgoing billions just to achieve budget savings of a few hundred million dollars, since we estimate that every $1 invested in the IRS produces $4 in revenue," he said.
Related: Coming soon: New steps to prevent tax refund fraud
Taxpayer service is also unlikely to improve if lawmakers don't restore at least some of the budget cuts the agency has sustained -- which Koskinen said amounted to $1.2 billion over five years.
Service hit a new low last year, when only about 40% of calls to the IRS were answered and taxpayers seeking in-person help had to wait in long lines outside of IRS service centers.
It got so bad that callers who'd been waiting up to two hours on the phone for an agent would then be automatically hung up on -- a so-called "courtesy disconnect" -- when the system was overloaded, which often happened since so many people tried calling back, Koskinen said.

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...we estimate that every $1 invested in the IRS produces $4 in revenue

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It got so bad that callers who'd been waiting up to two hours on the phone for an agent would then be automatically hung up on -- a so-called "courtesy disconnect" -- when the system was overloaded

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the IRS could upgrade to a "virtual hold" system wherein taxpayers could leave their phone number and get a call back when an agent is free. But to implement that would cost $45 million, Koskinen said.

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"Between 2005 and 2010, the revenue generated from audits averaged $14.7 billion annually. [Since then], it has averaged only $10.5 billion," IRS Commissioner John Koskinen said in an address to tax professionals on Tuesday.