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Overlooked tax deductions and credits

By the Numbers: $13.3 billion

President Obama released his fiscal year 2012 budget earlier this month.

For every president, the annual budget is like a kid's long Christmas wish list. It's what an Administration would like for Congress to OK.

And just like how Mom and Dad Santa picks and chooses which goodies actually show up under the tree, Congress has its say on every Commander in Chief's myriad budget requests.

One Representative immediately denounced any money to hire more IRS "goons."

But the annual fiscal exercise is how the system works (or doesn't, depending on your point of view). And it provides insight on what a president believes is important.

IRS gets budget thumbs up: For the coming fiscal year, Obama has given the Internal Revenue Service a vote of confidence.

He's seeking almost $13.3 billion to fund the tax agency's operations, which represent 94.5 percent of the entire Department of Treasury budget.

Obama's precise FY12 budget request for the IRS, and this week's By the Numbers featured figure, is:

Irs fy2 budget request
That amount is a $1.1 billion increase from the enacted fiscal year 2010 budget.

Here are some of the key ways the almost $13.3 billion would be allocated:

  • $339 million would go to new IRS enforcement initiatives
  • $33 million would go toward improving the IRS website and providing new online services
  • more than $18 million for health insurance tax credit adminsitarion
  • nearly $17 million would help increase oversight of tax return preparers   

Budget proposal, budget cuts: As I mentioned, these figures won't hold. The House, now under Republican control, isn't going to approve any money that supports any portion of health care reform law.

Plus, many GOP members of Congress already are skeptical of the IRS and its efforts to collect from businesses, a traditionally Republican-firendly constituency.

Every Congressional session, at least one lawmaker introduces a bill to abolish the IRS.

This year, we have H.R. 25, sponsored by Rep. Rob Woodall  (R-Ga.) and which so far has 55 cosponsors. A companion bill in the Senate, S. 13 by Sen. Saxby Chambliss (R-Ga.), has five cosponsors. The primarily responsibility for tax collection, mostly in the form of sales taxes under these bills, would fall to the states, not Uncle Sam.

The lawmakers supporting H.R. 25 and S. 13 obviously don't want to give the IRS any money.

And even catching tax evaders becomes politicized at budget time.

Treasury Secretary Timothy Geithner appeared before a House Budget Committee hearing on Feb. 16, two days after the Obama FY12 budget was released. During that session, Rep. Todd Akin (R-Mo.) referred to IRS agents as a "goon squad."

Akin told Geithner that he'd rather spend money on simplifiying the tax code than paying for more IRS examiners.

"Not to mention the fact that it’d make us all look better if we don’t have a goon squad of 5,000 IRS agents tromping around the country with the economy the way it is," Akin said.

Geithner told the Missouri Republican that most of the new IRS employees would work in customer service or information technology, not enforcement, but Akin was not appeased.

Look for similar IRS opposition on Capitol Hill as the budget process moves forward.

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