Oversight board seeks more money for IRS, but GOP skeptical

Key Republicans on the House Ways and Means Oversight Subcommittee turned a doubting ear Tuesday to pleas from the IRS's Oversight Board for more money to track down tax cheaters, despite Oversight Board Chairwoman Nancy Killefer's insistence that stronger enforcement could rake in billions of dollars in unpaid taxes.

Ways and Means Oversight Subcommittee Chairman Amo Houghton, R-N.Y. and Rep. Rob Portman, R-Ohio, contended that IRS's proposed $10.7 billion fiscal 2005 budget should have enough room to shift the agency's priorities in ways that would free additional money to extend the reach of its enforcement arm.

"You've got $10.7 billion," Houghton told Killefer. "Why can't you refocus on what you consider important within that amount?"

Killefer maintained that IRS has improved its productivity but said the agency has experienced deep losses in enforcement personnel and an increased workload over the past several years and can stretch its budget only so far.

When Portman pointed out that President Bush had steadily increased the IRS budget by almost 14 percent since fiscal 2002, both Killefer and IRS Commissioner Mark Everson noted that steep declines in appropriations for the agency in the late 1990s had led to a sharp falloff in enforcement that still haunts its efforts. "Since 1996, the number of [enforcement personnel] has dropped by over 25 percent," said Everson.

In a written statement he submitted to the panel, Everson reported: "We currently have a serious tax gap -- the difference between what our taxpayers are supposed to pay and what is actually paid -- in this country. By our best estimates, we lose a quarter-of-a-trillion dollars each year due to non-filing, underreporting and underpayment."

While Killefer called for a $500 million increase in the IRS budget for fiscal 2005, the Bush administration has requested an increase of $377.3 million. Everson, a Bush appointee, told the subcommittee that the $377.3 million would be enough to maintain IRS's existing service programs and beef up enforcement.

But Rep. Earl Pomeroy, D-N.D., agreed with Killefer that more was needed, because tougher enforcement ends up collecting considerably more than it costs. Not only that, he said, it sends the message to would-be tax evaders that the agency means business.

Killefer argued that "investment in enforcement pays for itself many times over" and said the administration tends to count IRS operations "as a cost factor rather than as a revenue center."

A 10 percent boost in IRS's appropriations, she said, would pay for more than 3,300 new enforcement agents and "increase our nation's revenue by approximately $5 billion each year, once IRS has hired and trained additional enforcement personnel."