IRS Pressures Build: Budgetary Constraints, the Aging IRS Workforce and Changes in IRS Focus

On April 10, 2013, President Obama released his proposed Fiscal Year 2014 Budget of the U.S. Government. The budget calls for an increase in funding for the Internal Revenue Service (“IRS”), which has faced budget cuts in previous years. The budget’s prospects for enactment, however, seem rather bleak. Budgetary constraints, along with the IRS’s aging workforce and recent changes in the IRS’s focus, highlight the current challenges that the IRS faces in enforcing federal tax laws.

The Budget -

In 2012, Congress set the IRS’s funding level at approximately $11.8 billion, a cut of $306 million from the fiscal 2011 funding level. Congress extended the 2012 spending package into the 2013 fiscal year through continuing resolutions, which maintained the IRS’s funding levels despite its request for appropriated resources of $12.8 billion. The recent budget sequestration that took effect on March 1, 2013, has further reduced the IRS’s budget, triggering an additional 5% cut of approximately $600 million. Acting IRS Commissioner Steven Miller recently warned a Congressional subcommittee that these cuts will likely cause the IRS to b ring in “substantially less” than the $2.52 trillion in taxes collected in fiscal 2012. Due to the sequestration and previous cuts, the IRS has seen its funding cut by more than $900 million in the past two years.

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