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IRS Budget Talks: Will They Increase or Decrease - R&G Brenner

Written by R&G Brenner | Mar 9, 2011 11:55:54 AM

President Obama’s proposed budget for 2012 includes an increase in funding for the Internal Revenue Service enforcement efforts.  Though Republicans talk of decreasing the IRS budget, the President believes that increasing the enforcement efforts will bring in additional revenue and assist in closing the deficit.

Turns out, IRS agents make good on the investment, collecting $3 to $4 for every greenback spent tracking down money owed to the government.

Republicans however do not agree with the plan and would like to potentially cut the IRS budget.

The Republican spending plan for the rest of the fiscal year would strip the IRS of $600 million in funding — including $285 million from the agency’s enforcement budget. In addition to their fervor to cut spending, some Republicans want to starve the IRS of resources it needs to implement last year’s health care reform law.

The uncertainty is looming with the discussion falling on completely separate platforms.  There is no way to determine at this time which direction the budget will fall.

Over the last decade, the agency has sharply increased the number of audits, liens and property seizures it carries out. The IRS believes that such enforcement results in additional gains as more Americans pay their taxes out of fear of an audit.

If Obama’s budget were to make it through Congress, the IRS estimates that the increase in its enforcement budget would boost general revenue by more than $1.3 billion annually by 2014.

Republicans are arguing that the return rates are not checked and that the idea that increased enforcement will automatically increase revenue is not reliable.  All of this discussion about the budget is great but “what about the taxpayer”?  We are left in fear that either the budget will be increased and the boogie man will come knocking on our door or the budget will be decreased and jobs will be lost.

McKenzie says the effect is very real, because in the “dark recesses of every American mind” exists a healthy fear of an IRS audit.

Source:  CNNMoney.com