Washington D.C. – One way the U.S. government can begin to claw back some of the massive deficit spending it has incurred because of the coronavirus pandemic would be to augment the tax examination and collection operations of the IRS.
Wednesday is Tax Day 2020, delayed from its usual spot on the calendar of April 15, and a new government report shows that fewer people and businesses would get away with avoiding their tax obligations if the IRS had more examiners, auditors and revenue officers.
“Once again, the government’s own analysts have proven that the IRS is a wise investment for the American people,” said NTEU National President Tony Reardon. “As most Americans voluntarily and in good faith file their taxes this Wednesday, they deserve some extra reassurance that the IRS is equipped to catch the scofflaws and collect the taxes that are rightfully owed by everyone.”
The Congressional Budget Office last week estimated that increasing the IRS budget for examinations and collections by $20 billion over 10 years would increase government revenues by $61 billion, and reduce the deficit by $41 billion. A 10-year, $40 billion boost equals a net decrease in the deficit of $63 billion.
And this week, the Treasury Department reported that the U.S. budget deficit hit a record high for June of $864 billion, fueled in part by coronavirus relief programs.
“You don’t have to overhaul the tax code or rewrite policy to make the IRS more efficient. Every year the government leaves money on the table by shortchanging the IRS’ ability to fully and fairly enforce the tax code,” Reardon said. “We hope that on this midsummer tax filing day, the administration and Congress will look to the career civil servants of the IRS to help our nation’s economic recovery.”
The CBO also reported that persistent cuts to the IRS budget have resulted in a 30 percent decline in the number of employees working in enforcement roles. For example, the number of revenue agents and revenue officers fell by 35 percent and 48 percent, respectively, between 2010 and 2018. The drop is a direct cause of 46 percent fewer individual income tax returns being examined, and a 37 percent decline in examinations of corporate income tax returns.
The annual gross tax gap – taxes owed but not collected – is about $441 billion.
A more robust enforcement operation is also a deterrent for tax evasion, which according to the IRS can triple the amount of revenue collected as a direct result of the increased enforcement.
The IRS in 2018 collected $3.5 trillion, or 95 percent of total federal revenues.
“The nation’s deficit hawks should look to the trained professionals of the IRS as one of the easiest ways to increase government revenue and make our voluntary system of tax compliance even more fair,” Reardon said.
The House Appropriations Committee on Wednesday is scheduled to debate legislation that would increase the IRS budget by $606 million in fiscal year 2021, including a $196 million for enforcement.
“Even as the IRS workforce has declined from years of unwise budget cuts, the dedicated employees continue to deliver quality service to the American taxpayers. I want to recognize the accomplishments of IRS employees in 2020 who kept up their efforts from kitchen tables and living room sofas during this global pandemic providing assistance to taxpayers and delivering much-needed economic stimulus payments,” Reardon said. “They have proven, once again, that the IRS workforce is among the finest in the world.”
NTEU represents about 150,000 employees at 33 federal agencies and departments.