House Proposal Would Slash IRS Budget by 24 Percent

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By Ken Berry

If certain Republican lawmakers have their way, the IRS will have less of the taxpayers' money to play around with. A new budget proposal released July 10 would limit the IRS budget to $9 billion – a reduction of 24 percent – while adding restrictions on the tax collection agency's spending activities. The proposed budget would be the smallest allowed to the IRS since fiscal year (FY) 2001.

Many House Republicans are seething after disclosures that the IRS staffers unfairly targeted conservative groups applying for tax-exempt status, created trivial video parodies purportedly used for training purposes, and lived it up at lavish hotel suites during conferences. The most serious actions have resulted in congressional investigations and a criminal probe. Under the new plan, the government would withhold 10 percent of the enforcement budget allotted to the IRS until the Treasury Inspector General for Tax Administration (TIGTA) confirms that the IRS has implemented all of its recommendations made in a recent report.

"It's time to clean up the act over there and it's been a lot of waste", said Charles Boustany (R-LA), one of the leading members on the House Ways and Means Committee. "We are going to cut its budget until they come clean. It'll force them to provide the information in our oversight efforts, but also to account for every dime that's spent."

The proposal would cut the current IRS $11.9 billion budget by almost one-quarter. However, the IRS is actually spending less than that amount due to the federal sequester initiated earlier this year. For instance, the IRS has mandated at least five nonpaid furlough days for its employees in an effort to help rein in expenses. Previously, the IRS had requested a $1 billion increase for FY 2014.

The most aggressive Republicans in the House don't plan on stopping there. In addition to limiting amounts spent on training videos and conferences, new proposed legislation is being debated that would remove the IRS as the agency enforcing provisions of the 2010 heath care law, the Patient Protection and Affordable Care Act (PPACA). "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 Representative Hal Rogers (R-KY), chairman of the House Committee on Appropriations, in a prepared statement.

But not everyone thinks slashing the IRS' budget is a good idea. Logically, a reduction at the IRS, particularly as it relates to its workforce, could affect the agency's tax collections. According to remarks by Treasury Secretary Jacob J. Lew made in May, each dollar spent on IRS enforcement yields $6 for the Treasury. Therefore, detractors point out that cutting $1.5 billion from the budget would, theoretically, result in $9 billion of lost revenue. Plus, provisions included in the PPACA and the Foreign Account Tax Compliance Act (FATCA) would give the IRS increased responsibilities with less money available to accomplish those goals. 

The National Treasury Employees Union (NTEU), which represents 150,000 employees throughout the federal government, has also gone on record as objecting to the proposed House budget. "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", protested NTEU President Colleen Kelley in a written statement.

A House appropriations subcommittee is scheduled to review the proposed plan. In the meantime, the stalemate between the Senate and House over a broader-based budget for FY 2014 continues.

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