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Appropriations Panel OKs Measure to Cut IRS Funding by $606 Million

By Alison Bennett
Publication Date: 06/17/2011

The House Appropriations Subcomittee on Financial Services and General Government June 16 passed, by voice vote, a funding measure that would grant the Internal Revenue Service $11.6 billion for fiscal year 2012—a $606 million reduction from the $12.1 billion the agency received in fiscal year 2011.

The largest portion of IRS funding—$5.2 billion—would go to enforcement under the bill revealed June 15 by the subcommittee. The measure funds operations support at $3.8 billion, taxpayer services at $2.2 billion, and business systems modernization at $330 million. President Obama requested about $13.3 billion for IRS in fiscal year 2012.

Colleen Kelley, president of the National Treasury Employees Union, said June 16 the cuts could result in the loss of more than 8,000 jobs at IRS, “seriously impacting the ability of this key agency to collect the critical revenue the government needs to serve the public.”

Treasury Funding Nearly $2 Billion Below Request

The $11.6 billion in IRS funding approved by the subcommittee is included in $12.2 billion to fund the Treasury Department in fiscal year 2012. Overall funding for Treasury is $929 million below last year's level and nearly $2 billion less than the president's request, which totaled about $14.1 billion, according to documents released June 15.

The developments came after the House budget resolution reduced budget authority for the House Appropriations subcommittee by nearly $2 billion.

Several days before the markup of the bill, IRS Commissioner Douglas Shulman said cuts in funding stemming from the House budget resolution could both hurt IRS operations and do economic harm to the country.

Shulman Predicts Cuts Would Hurt IRS Before Markup

Shulman told a Senate panel June 7 that the reductions in budget authority would hurt IRS because it is the agency that receives the majority of funding through that panel.

Testifying on the IRS budget before the Senate counterpart to that House committee, Shulman said the cuts could impact IRS's ability to collect revenue and therefore could actually increase the deficit. The reductions could lead to “conspicuous cuts” in enforcement, which in turn could reduce taxpayers' voluntary compliance with the tax system, Shulman said.

The proposed IRS budget would give the agency about $1.1 billion more than it received last year, an increase of about 9 percent.

The complete text of this article can be found in the BNA Daily Tax Report, June 17, 2011. For comprehensive coverage of taxation, pension, budget, and accounting issues, sign up for a free trial or subscribe to the BNA Daily Tax Report today. Learn more »

© 2011, The Bureau of National Affairs, Inc.