IRS Oversight Board Calls For More Cash To Bolster Enforcement

by Leroy Baker, Tax-News.com, New York

05 August 2004

The Internal Revenue Service Oversight Board on Tuesday called for more funds to help the IRS collect some of the estimated $311 billion a year in unpaid taxes, and counter a growing perception amongst taxpayers that most tax crimes go unnoticed.

Whilst the Board’s annual report sang the praises of IRS efforts to improve customer service, it was harshly critical of the “weakened and vulnerable IRS enforcement program” which it claimed is being exploited daily by those wishing to evade the tax law.

To illustrate the point, the Board revealed that in FY2003, the IRS was able to pursue only 18% of known cases of abusive devices designed to hide income, leaving an estimated $447 billion uncollected.

The report also concluded that there is only one chance in four that the IRS will go after an individual who does not file a return.

“Obviously, taxpayers are not well-served with a shaky enforcement program, and we must put it on a firm footing,” asserted Board Member Chuck Kolbe.

“The Board’s research shows that taxpayer attitudes towards cheating are eroding. We must re-instil confidence in the fairness and effectiveness of our tax system,” he added.

One of the Board’s “greatest concerns” continues to be the IRS funding issue. In both its budget report issued earlier this year and today’s annual report, the Board warns of a "disturbing trend" whereby projected hiring of new enforcement personnel evaporates in the face of resources being redirected to pay for unfunded mandates, such as pay increases.

“In an all too familiar scenario, the IRS will begin its fiscal year deep in a budgetary hole. It’s no wonder that tax cheats have declared open season on the IRS,” complained Board Chair Nancy Killefer.

“We need a realistic budget for the IRS that reflects these political realities,” she concluded.

President Bush has asked Congress to make $4.6 billion available this year for IRS enforcement funding, up from $4.2 billion last year. However, the House Appropriations Committee has voted to limit the increase to $4.3 billion. The Senate has yet to write its version of the bill.

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