This Tax Season, The IRS May Feel Your Pain The agency faces a $600 million cut to its budget for the rest of the current fiscal year, if congressional Republicans have their way. The agency says such a large budget cut would hinder its tax-collection efforts, and that in turn could reduce revenues coming into the Treasury.
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This Tax Season, The IRS May Be Feeling Your Pain

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This Tax Season, The IRS May Be Feeling Your Pain

This Tax Season, The IRS May Be Feeling Your Pain

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ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK, host:

And I'm Melissa Block.

It's tax season and as painful as that may be for many Americans, the IRS may soon be feeling some pain of its own. The agency faces a $600 million cut to its budget for the rest of the current fiscal year. That is if congressional Republicans have their way. The IRS says the move would hinder its tax collection efforts and could mean less money coming into the Treasury, as NPR's Brian Naylor reports.

BRIAN NAYLOR: There are few, if any, other federal agencies that give taxpayers as much bang for their bucks as the IRS. The IRS is, after all, the agency that brings in those federal dollars from individuals and businesses. In recent years, it's tried to present a more friendly face to taxpayers, employing all manner of devices from radio PSAs to social media and video spots like this one on the IRS's own YouTube channel offering helpful advice.

(Soundbite of YouTube video)

HECTOR: Hi, I'm Hector and I work for the IRS. Organizing your financial records now will make filling out your tax return easier next year. It will also help if your return is audited.

NAYLOR: Now, no one wants to hear that word, but the IRS brings in a lot of money from its collection activities. Robert McKenzie is a tax lawyer in Chicago.

Mr. ROBERT MCKENZIE (Tax Lawyer, Chicago): It's almost a direct correlation between the amount of money that's given to the IRS for enforcement activities and what they bring in in extra money each year. And so if you cut $600 million out of the IRS budget and it comes from the enforcement, we could project that we will increase the deficit by about $6 billion.

NAYLOR: Now, IRS commissioner Douglas Shulman is a little bit more conservative. He told a House panel last week that the cut from his budget would translate to $4 billion less revenues to the government this year. Still a significant bite, considering the government is running a one-and-a-half trillion dollar deficit.

But Republican Congressman Charles Boustany of Louisiana, whose subcommittee overseas the IRS, is skeptical.

Representative CHARLES BOUSTANY (Republican, Louisiana): I don't buy that and I don't think that's really going to be the case. And clearly, the commissioner is interested in getting more funding to the IRS and, you know, I think that's going to be his goal. But in this tight budget situation, we're going to have to look at cuts across the board.

NAYLOR: Democratic Congressman Lloyd Doggett, of Texas, agrees that all federal spending needs to be scrutinized. But he says the House-passed plan smacks of political payback.

Representative LLOYD DOGGETT (Democrat, Texas): To reduce enforcement and revenue collection seems to follow a traditional Republican theme of always demonizing the IRS, which is easy to do, by starving it, by assuring that it doesn't have the resources to be responsive to legitimate taxpayer concerns.

NAYLOR: To be sure, the IRS has run afoul of Congress in the not-too-distant past. In the 1990s, lawmakers held hearings in which taxpayers recounted horror stories of IRS agents seizing their property and garnishing their wages. Congress reigned in what it perceived to be the agency's excesses. Tax attorney McKenzie, who is a member of the IRS Advisory Council, says there are still some rogue agents, but to cut the budget to get at them doesn't make much sense.

Mr. MCKENZIE: I think that's bad policy because if you have 90 percent of the agents and revenue officers doing a good job and 10 percent who may not be doing a good job, to cut the entire budget to get to that problem, that - all you do is prolong the problem.

NAYLOR: There's another funding fight over the IRS on the horizon. President Obama has proposed raising the agency's budget in the next fiscal year, in part, to hire agents to implement health care reform. Republicans see this as one of their options to block what they deride as ObamaCare and are expected to push for further cuts in the agency's budget.

Brian Naylor, NPR News, Washington.

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