GOP looks to cut IRS budget despite returns

The Associated Press
Tuesday, March 1, 2011; 5:33 PM

WASHINGTON -- Every dollar the Internal Revenue Service spends for audits, liens and seizing property from tax cheats brings in more than $10, a rate of return so good the Obama administration wants to boost the agency's budget.

House Republicans, seeing the heavy hand of a too-big government, beg to differ. They've already voted to cut the IRS budget by $600 million this year and want bigger cuts in 2012.

The IRS has dramatically increased its pursuit of tax cheats in the past decade: Audits are up, property liens are up and asset seizures are way up. President Barack Obama and Democrats in Congress see stepped up enforcement as a good way to narrow the nation's staggering budget deficit without raising tax rates or cutting popular spending programs.

"It makes little sense to cut the agency that collects revenue," said Rep. Jose Serrano of New York, the top Democrat on the House subcommittee that oversees the IRS budget.

IRS Commissioner Doug Shulman told the committee Tuesday that the $600 million cut in this year's budget would result in the IRS collecting $4 billion less through tax enforcement programs. The Democrat-controlled Senate is unlikely to pass a budget cut that big. But given the political climate on Capitol Hill, Obama's plan to increase IRS spending is unlikely to pass, either.

Obama has already increased the IRS budget by 10 percent since he took office, to nearly $12.5 billion. The president's budget proposal for 2012 would increase IRS spending by an additional 9 percent - adding 5,100 employees.

Republicans, however, view the IRS as an ideal target in their promise to reduce government spending, in part because the agency will play a big role in implementing Obama's new health care law. If the law survives court challenges, the IRS will administer tax credits for businesses that provide health insurance to employees, as well as credits to help individuals pay for coverage. The agency also is tasked with enforcing the mandate that most Americans buy health insurance, starting in 2014.

Obama's 2012 budget proposal for the IRS includes $473 million and 1,269 new positions to start implementing the health care law.

"At a time when we have to tighten the belt from a budgetary standpoint, we're seeing massive new responsibilities laid at the doorstep of the IRS and it's making it more difficult for them to meet their charges of enforcement as well as customer service to the taxpayer," said Rep. Charles Boustany, R-La., chairman of the House Ways and Means oversight subcommittee.

Republicans want to deprive the agency of money to enforce the new law, but the budget cuts go deeper than health care, reflecting GOP concerns about an agency that touches nearly every business and adult in the nation - as well as many that operate abroad.

"We're hearing from small businesses a repeat of the horror stories from more than 10 years ago," said Rep. Pat Tiberi, R-Ohio, chairman of the House Ways and Means subcommittee on select revenue measures. "I think you will see House Republicans have a real discussion about the role of the IRS in this country as we are trying to grow the economy and create jobs."

In the late 1990s, Congress held hearings so taxpayers could relate horror stories about dealing with IRS tax collectors. The hearings resulted in a 1998 law that reorganized the IRS and largely reined it in, guaranteeing taxpayers rights and due process when the IRS files property liens, seizes bank accounts or garnishes wages.

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