House Committee To Probe IRS Operations And Budget

by Mike Godfrey, Tax-News.com, Washington

01 June 2009

A House of Representatives committee has scheduled a hearing to examine Internal Revenue Service (IRS) operations for the 2009 tax filing season and the agency’s proposed budget for 2010, which includes substantial new money for enforcement activities.

In announcing the hearing, scheduled for June 4 by the House Ways and Means Oversight Subcommittee, John Lewis, subcommittee chairman, said that Congress must ensure that IRS enforcement activities do not unduly burden taxpayers at a time when many people are experiencing economic hardship.

IRS Commissioner Doug Shulman will be the only witness to testify at the hearing, although Lewis has announced that any individual or organization may submit a written statement for consideration by the subcommittee.

According to Lewis, in 2008, the IRS collected USD2.7 trillion in taxes and processed nearly 250 million tax returns, including 150 million individual income tax returns. Through May 1, 2009, the IRS collected USD1.5 trillion in taxes and processed nearly 155.4 million returns, including 126.4 million individual returns.

Lewis said that the subcommittee intends to discuss the most recent tax return filing season with a focus on “taxpayer service, the recovery rebate, and taxpayer privacy concerns.”

The subcommittee also will review IRS operations not related to the filing season, including examination rates, collection activities, and the ‘tax gap.’ In addition, the new Making Work Pay tax credit - introduced as part of the American Recovery and Reinvestment Act earlier this year - new withholding tables, and administration of other tax provisions in the stimulus legislation will be examined.

The subcommittee will also discuss the administration’s fiscal year 2010 proposed budget for the IRS of USD12.1bn, an increase of 5.2% over the fiscal year 2009 level.

President Obama’s 2010 budget blueprint, released to Congress earlier this month, includes funding for a “robust portfolio of IRS international tax compliance initiatives, and sustains and improves IRS efforts to narrow the annual tax gap of over USD300bn.” The blueprint proposes to more than quadruple the agency’s enforcement budget to more USD2bn, much of which will be directed towards policing the international tax system.

In announcing the hearing, Lewis said: “The recession has affected all aspects of our economy, including IRS operations. We must make sure that the IRS strikes the right balance between enforcement and taxpayer service in these difficult economic times. As we move forward toward 2010, the Congress must ensure that the IRS has the tools it needs to collect taxes in a manner that is fair for all Americans.”

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