Budget cuts could force the IRS to shut down operations for two days later this year, resulting in unpaid furloughs for employees and service cuts for taxpayers, IRS Commissioner John Koskinen said Tuesday.

In an email to workers, Koskinen said staff reductions will result in fewer audits and delays in technology upgrades. Koskinen previously announced that some tax refunds could be delayed.

Koskinen says the agency’s $10.9 billion budget is the lowest level of funding since 2008. When adjusted for inflation, the budget hasn’t been this low since 1998, he said.

“Unfortunately, this means at this time we need to plan for the possibility of a shutdown of IRS operations for two days later this fiscal year, which will involve furloughing employees on those days,” Koskinen said in the email. “Shutting down the IRS will be a last resort, but I want to be upfront with you about the problem.”

Koskinen said the agency will extend a partial hiring freeze through the end of the budget year in September. He said fewer enforcement agents will cost the federal government at least $2 billion in lost tax revenue.

“IRS employees are doing their best to handle the rising demand for their services, but they will simply not be able to keep up,” said Colleen M. Kelley, president of the National Treasury Employees Union. “I have urged the IRS not to make any decisions on furlough days this early in the fiscal year and to work with us to find other alternatives.”

(AP)