IRS Oversight Board Warns More Money Is Needed To Enforce Tax Compliance

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

31 March 2004

The $10.7 billion proposed by the Bush administration for the Internal Revenue Service’s budget will not be enough to bolster the agency’s tax collection efforts next year, according to a report released yesterday by the IRS oversight board.

Whilst President Bush is asking Congress to boost the IRS budget by 4.6%, a sum intended mainly to be put to use improving the agency's dismal enforcement record, the board fears that much of this increase will be absorbed by pay increases and rising costs unrelated to tax collection.

Consequently, the report argues, an additional $530 million is needed to adequately fund the IRS’s enforcement activities, an additional investment which the board claims will yield $5 billion annually in extra tax revenues.

"The Board believes that now is a critical time for our tax system to be strengthened, not merely maintained at current levels. Enforcement activities are still at unacceptable levels," stated the report.

According to the oversight board, the government has failed to take into account $130 million in pay rises and a further $100 million in extra costs such as postage.

The report said that this will have the effect of reducing the 981,000 delinquent tax cases the IRS was planning on investigating by 518,000; cutting the target of 32 million answered customer service calls to 17 million; and scaling back the 118,840 audits planned for taxpayers with gross incomes of less than $100,000 to 73,000.

However, not all are convinced by the assertions made in the report, including the IRS Commissioner Mark W. Everson, who has said that the percentage increase in the agency’s budget is ten times higher than any other department not connected to defence or homeland security.

"I am 100 percent satisfied with the president's request for the agency," he commented. "And I am asking for every penny of it, but not a penny more."

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