The IRS Oversight Board yesterday released its 2012 Annual Report to Congress:

[T]he IRS Oversight Board praised the IRS for the progress it achieved over the past fiscal year that contributed to the effectiveness, efficiency and integrity of the nation's tax system. However, the Board also warned that the IRS is operating in a high-risk environment.
Specifically, budget constraints have resulted in lower staffing levels, and in turn, reduced customer service levels. Further budget cuts could potentially erode the agency's ability to collect revenue to fund essential government programs, the Board cautioned. The report also called for continued progress in the fight against tax refund fraud and stated that the IRS must stay focused on its key mission and strategic goals in spite of an expanded portfolio of duties.

• Federal News Radio, IRS Budget Woes, Shrinking Staff Threaten to Derail Agency
  
• Treasury Inspector General for Tax Administration, Improvements Have Been Made to Address Human Capital Issues, but Continued Focus Is Needed (2013-10-017)