Obama Administration Fiscal Year 2112 Budget Proposal Requested $13.3 Billion For IRS

The Obama administration in its fiscal year 2112 budget proposal requested $13.3 billion for IRS. (Fact Sheet 2011-9, February 2011) This is a $1.1 billion increase from the FY 2010 budget. The funding request “reflects a continued commitment to balance taxpayer service with fair enforcement of the tax laws,” the agency said, adding that it “will also continue to invest in its service program, with particular emphasis on online services.” IRS has emphasized several aspects of the budget request: enforcement, the tax return preparer initiative, taxpayer service, the Business Systems Modernization program, meeting the requirements of the Patient Protection and Affordable Care Act, and the administration of the health coverage tax credit. The budget proposal includes $339 million in new IRS enforcement initiatives, which is expected to raise $1.3 billion in annual revenue at full performance in FY 2014, the agency said. The proposed funding would strengthen enforcement efforts regarding offshore tax evasion, information reporting requirements enacted in 2008 to validate income reported by businesses by reconciling their income with payment card receipts and third party transactions, and improving tax debt collection coverage and processes. The budget request contains $17 million to increase oversight of tax return preparers. “This initiative will help ensure uniform and high ethical standards of conduct for tax return preparers by enforcing preparer compliance with IRS rules, increasing preparer examinations and pursuing preparers engaged in fraudulent activities,” the agency said. Taxpayer service would be bolstered by funding to increase taxpayer access to telephone assistance, strengthen compliance and address increased demand for electronic services. The request includes $33 million to improve IRS's website and provide new online services. The modernization request would fund continued implementation of the core taxpayer account database known as the Customer Account Data Engine 2 (CADE 2) and the expansion of Modernized e-File (MeF). According to IRS, the MeF budget request would enable it to add a final batch of 125 forms and schedules to the MeF system and “expand the reach of MeF to all of the e-File population, nearly 100 million individual filers.” The funding request reflects the cost for administering the tax provisions included in the PPACA. This funding would be used for the administration of various provisions of the act (some of which are not yet in effect), such as the small employer health care tax credit, the premium assistance tax credit and the individual coverage requirement. More than 80% of the PPACA request is devoted to information technology and other infrastructure, IRS noted. Finally, $18 million is included in the budget proposal to administer the health coverage tax credit created in trade legislation enacted in 2002. The credit pays 80% of a qualified health plan premium for eligible trade-affected workers, and Pension Benefit Guaranty Corporation payees and their families.