House Appropriators Slash IRS Budget in Wake of Scandal

In a bid to help “prevent future IRS abuses,” the House Appropriations Committee on Tuesday posted its draft of the fiscal 2014 financial services spending bill that includes a highly unusual 24 percent slashing of the budget for the scandal-tarnished Internal Revenue Service.

Released in preparation for a Wednesday markup, the $17 billion draft bill that covers the Treasury Department, White House, Small Business Administration, and Securities and Exchange Commission among others is $4.3 billion below the fiscal 2013 level.

The line item for the tax agency -- which for two months has come under investigation and angry criticism for mishandling applications for tax-exempt status and overspending at a 2010 conference -- would be $4 billion, or 30 percent, below the budget requested in April by President Obama.

“This bill right-sizes federal agencies and programs that are simply not working efficiently or effectively, while investing in programs that directly serve the American people,” said Appropriations Chairman Hal Rogers, R-Ky., in a news release. “From helping to prevent future inappropriate actions by the Internal Revenue Service, to encouraging small business growth, to halting wasteful or unnecessary government spending, the bill ensures that tax dollars are used wisely and where they are needed the most."

The current bill includes:

• Withholding of 10 percent of funds for IRS enforcement activities pending implementation of all recommendations from the Treasury Inspector General for Tax Administration to prevent future inappropriate targeting;
• A prohibition on funding for conferences until all recommendations from the TIGTA on conferences have been implemented;
• A prohibition on funding for employee bonuses and awards until a review of the effectiveness of bonus and award programs is completed;
• A prohibition on funding for the production of videos that have not been reviewed or certified to be appropriate; and
• Extensive reporting requirements on the use of funds.

The bill was immediately attacked by the National Treasury Employees Union, which represents many IRS employees. NTEU charged that it would “set the agency back by more than a decade and leave taxpayers struggling to get assistance from this critical government agency. ”

The cut –“would take the agency’s budget back to just above the level of more than a decade ago, in fiscal 2001,” NTEU President Colleen Kelley said. “In terms of the ability of the IRS to meet its mission on behalf of the American people, such a budget would absolutely devastate the agency.”

The union sent a letter to the House Appropriations Financial Services Subcommittee saying, “The drastic cuts to IRS’ budget come at a time when the IRS workforce is already facing a dramatically increased workload, with staffing levels down by more than 20 percent below what they were just 15 years ago."

Because of sequestration, NTEU added, “IRS employees already have suffered through three unpaid furlough days -- during which no IRS services were available to the public -- and face as many as four additional such days by the Sept. 30 end of this fiscal year.”

Kelley estimated that such a cut would translate to a loss of more than $14 billion in revenue in fiscal 2014 alone. She argued that the TIGTA investigation of the mishandling of applications for tax-exempt status found no evidence of intentional wrongdoing or political motivation by IRS employees.

Also taking a hit under the bill is the General Services Administration, which has been going through its own turmoil due to revelations of lavish spending at a 2010 conference. To make GSA “more transparent and accountable to the taxpayer,” the bill would cut $2.4 billion from GSA’s Federal Buildings Fund and restructure GSA accounts to “separate out” administrative expenses and cut them by 15 percent below Obama’s request, the appropriations committee said.

The bill would require additional GSA reporting on property inventory and on its working capital fund, adding new prohibitions on travel and conferences and boosting funding for GSA’s inspector general.