Washington, D.C.—The unique role of the Internal Revenue Service (IRS) in generating 93 percent of all government revenue strongly supports the view that providing the IRS with sufficient resources is an investment rather than an expense, the head of the union representing IRS employees said today.
President Colleen M. Kelley of the National Treasury Employees Union (NTEU) told a key House subcommittee that, particularly in the current budget environment, “it is critical that the IRS have the resources it needs to maximize taxpayer compliance, reduce the tax gap and generate critical revenue for the federal government.”
The tax gap is the difference between taxes owed and those paid; the IRS estimates the amount of tax not timely paid is $450 billion, a figure translating to a non-compliance rate of almost 17 percent.
“Even an incremental reduction in the amount of unpaid taxes would provide critical resources for the federal government,” she told the House Financial Services and General Government Appropriations Subcommittee in submitted testimony. For every dollar Congress appropriated to the IRS in fiscal 2012, the agency collected about $214 in return.
Unfortunately, she told the House members, significant reductions in IRS funding in recent years—even before the impact of sequestration—have undermined the agency’s ability to maximize taxpayer compliance. Since fiscal 2011, IRS funding has been reduced by almost $1 billion, resulting from a cut of $305 million for fiscal 2013, compounded now by cuts of nearly $600 million under sequestration.
“These cuts have led to an ongoing hiring freeze for the IRS for the past several years and have strained its capacity to carry out its important taxpayer service and enforcement missions,” she said.
The consequences for taxpayers have been serious, as well, Kelley noted, pointing out the severe impact of sharply reduced staffing at Taxpayer Assistance Centers, significantly fewer taxpayer telephone calls able to be answered and long delays in responding to taxpayer letters.
The funding and personnel constraints have come at a time when the IRS workforce already faces a dramatically increasing workload, with staffing down by more than 3,800 from the fiscal 2011 tax-filing season, and more than 20 percent below what it was just 15 years ago.
“Limited resources impede the agency’s ability to conduct education and outreach to taxpayers, particularly small business, and to enforce tax laws,” she told the subcommittee.
The IRS, which is planning unpaid furloughs of between 5 and 7 days, previously said the cuts would force it to complete fewer tax return reviews, and would reduce its capacity to detect and prevent fraud, resulting in an inability to collect and protect billions of dollars in revenue annually, Kelley said.
“NTEU believes it makes sense to invest in one of the most effective deficit reduction tools: collecting revenue that is owed, but hasn’t yet been paid,” she added. “Do the numbers. Starving the IRS will only serve to increase the deficit.”
NTEU is the largest independent federal union, representing 150,000 employees in 31 agencies and departments.