Obama Would Hike IRS Budget by 9 Percent

Fresh off a $290 million increase in last fall’s two-year budget deal, the Internal Revenue Service would receive a 9 percent hike under President Obama’s fiscal 2017 budget.

The proposed $12.2 billion total budget would raise the number of full-time employees by some 4,000 to 84,803. It would help the agency improve security and customer service, and streamline compliance programs, the budget documents said.

Obama seeks a $587 million increase in funding for IRS tax enforcement above the current level.

In addition, the plan promises to make IRS operations more efficient and combat identity theft. The plan would ensure compliance with the Federal Records Act to implement an electronic document retention policy—a sore point for lawmakers in recent years during probes of alleged political bias in the IRS’s Exempt Organizations division.

 Testifying Wednesday before the Senate Finance Committee, Commissioner John Koskinen said that, despite the useful cash infusion just before filing season began, the agency is “still $900 million short.” Citing 300 “mandated cost increases” from laws, he said the IRS will continue its exception-only hiring among other belt-tightening. The proposed budget increase of $1 billion contains 15 separate new initiatives, “and we are prepared to be held accountable for achieving them,” he said.

When Sen. Ron Wyden, D-Ore., the panel’s ranking member, asked about the ongoing year-to-year gap between taxes owed and taxes collected, Koskinen said, “Ultimately audits depend on people, and we don’t have enough people.”

That view drew backing from testimony submitted by the National Treasury Employees Union, whose national president, Tony Reardon, said the administration’s “funding proposal would enable the IRS to improve taxpayer services, combat identity theft and better enforce the federal tax code.”

Every dollar invested in IRS enforcement programs, NTEU reiterated, generates about $6 in increased revenues. “Yet, because of budget cuts, the agency collected less revenue through enforcement efforts last year—$54.2 billion—than in fiscal 2007, when it brought in $59.2 billion,” Reardon said.

The union also mentioned long wait times for taxpayers who call for assistance or visit understaffed taxpayer assistance centers. Timely assistance over the phone or in person is of particular importance for victims of identity theft and other types of refund fraud, the NTEU leader said. “These cases are extremely complex cases to resolve and can be very frustrating for victims.”

Senators also asked Koskinen whether the IRS would be ready by the March deadline with a new mandatory program to outsource the collection of unpaid taxes to private debt collectors. “That would be impossible in 90 days,” Koskinen told Sen. Chuck Grassley, R-Iowa. “There is no program yet—we have to design the information technology and provide the training.” But he committed to providing the committee with a timeline. “I’ve told our people to leave no stone unturned and move as quickly as possible.”

Sen. Richard Burr, R-N.C., raised a past Government Accountability Office report showing that the IRS rehired employees with past misconduct issues. Koskinen replied that the process has changed since his arrival. “We don’t hire people with prior performance issues, or who abused taxpayers,” he said.

His ultimate goal as commissioner, Koskinen told the panel, is to assure a return to stable IRS funding in the future.