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Increase the IRS budget; No, don't!

The agency in charge of collecting the money needed to run the U.S. government and its programs has taken an early hit in the Congressional appropriations process.

The House Appropriations Committee's subcommittee on financial services and general government has signed off, by voice vote, on a $19.9 billion bill to pay for financial services and general government costs through Sept. 30, 2012.

Irs_logo_208 Specifically, the House panel's budget calls for the IRS to get more than half of the total spending allocation. But the proposed $11.5 billion for the tax enforcement and collection crew is $606 million less than the IRS received in fiscal 2011. And it's $1.8 billion less than requested in the president's budget proposal.

That's not the Follow-up Friday (or any day) news that IRS Commissioner Doug Shulman, who previously testified before Congress that budget cuts to his agency would increase the deficit, wanted to get.

Rep. Jose Serrano of New York, the subcommittee's top-ranking Democrat, said the cuts would force the IRS to furlough up to 4,100 employees.

"This is exactly the sort of short-term cut that will do much greater harm than good in the long term," Serrano said.

Some outside support: For what it's worth, which practically and fiscally speaking isn't a lot, the IRS did get some love this last week.

The IRS Electronic Tax Administration Advisory Committee (ETAAC), in its annual report to Congress, recommended that lawmakers fully fund the agency's modernized electronic filing effort.

The IRS is at a strategic inflection point, notes ETAAC, which is being driven by factors such as:

  • Budget pressures, and likely reductions, for IRS;
  • Loss of key talent as experienced IRS employees and managers retire and, in some cases, are not replaced;
  • Rapid technological changes as new computing and communications devices, such as smart phones and tablets, are launched; and,
  • Rapidly increasing taxpayer expectations for better, faster service, driven in large part by technological changes and consumer experiences outside of the tax environment.

While the ETAAC report isn't likely to convince Congress to shell out more dollars in these budget-cutting times, the IRS can take some solace in knowing that someone feels its pain.

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