Congress Cuts IRS Enforcement Budget

Congress has scaled back the Internal Revenue Services' ambitious enforcement proposal by $420 million.

IRS Commissioner Mark Everson had requested a $10.7 billion budget for the 2005 fiscal year, or a 5 percent increase, to crack down on abusive tax shelters and other tax-avoidance techniques by wealthy taxpayers, corporations and some charities.

However, the Senate Appropriations subcommittee on transportation and Treasury issues approved a $10.25 billion budget last week. The companion committee in the House set aside $10.3 billion, the Wall Street Journal reported.

Sen. Richard Shelby, R-Ala. and chairman of the Treasury appropriations subcommittee, expressed some skepticism of Everson's plan. Referring to the IRS' existing budget, he said in April, "I find it hard to believe that the IRS lacks the resources it needs to get the job done."

Meanwhile, the Treasury inspector general said in a new report that the IRS has fewer staff to pursue people who don't file their taxes. The number of non-filers who did not receive a delinquency notice from the IRS went from 4.8 million in 1994 to 6.7 million in 2001.

"The agency simply has more work than it can handle, and as a result, honest taxpayers are shouldering more of the tax burden," Sen. Max Baucus, D-Mont., said in a statement Friday. "The IRS is making gains but losing ground."

Baucus and other Democrats say that granting the IRS its full funding request will help ensure all taxpayers pay their fair share while helping to bring in some of the $311 billion "tax gap," a measure of uncollected taxes.

It is not likely that the House and Senate would expand the IRS budget as the bills proceed, the Journal reported, considering federal budget problems and pressure on Republican leaders to rein in spending.

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