Board Recommends $13.03 Billion for IRS Budget
The IRS Oversight Board has recommended that the IRS have a budget of $13.03 billion for fiscal year 2013. This represents a $1.22 billion increase over the 2012 budget of $11.81 billion, and a $273 million increase over the president’s recommendation of $12.76 billion.
The board’s recommendation includes $2.35 billion for taxpayer service, an increase of $115 million over the 2012 budget; $5.7 billion for enforcement, an increase of $400 million over the 2012 budget; and $330 million for Business Systems Modernization (BSM), the same level as the 2012 budget. The board says its proposal would:
- Restore funding cuts made to IRS enforcement programs in the previous year’s budget.
- Fund taxpayer services so that an 80 percent level of service can be attained on IRS toll-free telephone lines.
- Fund programs related to implementing the Patient Protection and Affordable Care Act (PPACA).
- Fund programs and initiatives that represent investments in future performance gains.
The board said taxpayer service fell to 70 percent in 2011. The board’s funding request for taxpayer service exceeds President Obama’s request and the 2012 level. The president’s budget would fund the level of service at only 63 percent for 2013, far below the 80 percent level that taxpayers deserve, according to the board. The decline in service is particularly harmful as the tax system grows more complex. Taxpayers may file an incorrect return if they cannot obtain needed assistance.
The board’s recommendation for funding enforcement matches the president’s budget, and would fund several key initiatives:
- Restoring audit and collection coverage lost in 2012 budget reductions.
- Expansion and implementation of important enforcement programs, such as international and offshore compliance, expanded information reporting, and regulation of tax return preparers.
- Enforcement activity related to the tax provisions of PPACA.
The board did not recommend any increase in BSM funding, nor did the president. However, the board noted the importance of maintaining BSM funding at current levels to ensure continued success.
According to the report, there has been steady growth in IRS funding over the past decade, which has brought about improved IRS performance by almost every measure. However, during the past two years, this pattern of growth has been broken. The board, the IRS Commissioner, and the National Taxpayer Advocate have all warned about the dysfunctional consequences of these budget reductions, including reduced taxpayer service and lower tax revenues.
In October 2011, the board wrote to Congress urging budget cuts. At that time, the board said that the gap between the level of congressional funding and the board’s recommendations was "disturbingly large."
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