Union leader advocates more resources for IRS, better use

The Internal Revenue Service could bring in more than half of the estimated $345 billion in taxes that goes uncollected every year with more resources and better use of them, the head of an employee union said Monday.

Colleen Kelley, president of the National Treasury Employees Union, based her statement on an IRS estimate of the tax gap - the difference in the total taxes owed the federal government and the amount collected -- in 2001, the most recent year for which data is available. She said no one knows the real number, which she described to reporters as a moving target.

Kelley noted that the amount of the tax gap that could be reclaimed through IRS enforcement and service changes is far from a science, and that each person to whom the question was posed would give a different answer.

Robert McIntyre, director of Citizens for Tax Justice, a taxpayer advocacy group, said the tax gap is actually far higher than $345 billion, thanks in part to offshore tax havens, which could account for another $50 billion to $100 billion in avoided taxes annually. He said most or nearly all of that could be collected by laws and enforcement measures that effectively target those tax havens.

The IRS calculates that under legislative proposals submitted with its fiscal 2008 budget request, it would cut into the gap by $29 billion cumulatively over 10 years.

In the past, IRS Commissioner Mark Everson has said the agency could collect an additional $50 billion to $100 billion annually. But at a February hearing, he declined a suggestion by Senate Budget Chairman Kent Conrad, D-N.D., that the agency should get $250 million more in funding, warning that growing the budget too quickly could lead to a loss of control.

An IRS spokesman said Monday that the $29 billion estimate is a conservative calculation of the possible increase in collections, and stressed that the estimate for uncollected taxes incorporates a lot of uncertainties.

The spokesman highlighted the roles that greater third-party data reporting and withholding can play in closing the tax gap, and Everson has frequently noted that the agency cannot audit its way to full compliance.

NTEU's Kelley focused more on staffing aspects of enforcement and taxpayer services. The union advocates that the agency increase its staffing levels through budget boosts of 2 percent per year for five years, and Kelley noted that under the president's proposed budget, the agency would have slightly fewer employees at the end of fiscal 2008 than it had in fiscal 2006.

On Monday, she also reiterated the union's opposition to the outsourcing of some debt collection activities. She said that based on IRS data, it costs the agency 42 cents to collect $100 in taxes, whereas contractors are awarded fees of $21 to $24 per $100 they collect. Everson has said the agency does not have the funds to hire more employees to do the work.