A group of House Democrats is asking for extra funding for the Internal Revenue Service instead of the steep cuts proposed by the Trump administration.
Rep. Keith Ellison, D-Minn., in a letter Wednesday also signed by 47 other lawmakers, asked the leaders of the House Appropriations Committee for $12.9 billion for the IRS for fiscal year 2018, an increase over the $11.2 billion budget for fiscal 2017.
“An increase in funding for the IRS will reverse the short-sighted and damaging budget cuts which have increased our national debt, left the IRS ill-equipped to combat refund errors and fraud, drastically reduced taxpayer services and dangerously reduced audits, and will limit the IRS’s ability to implement new laws passed by Congress,” said the letter.
In contrast, the Trump administration has proposed a $239 million cut, or about 2 percent of the IRS’s budget, even though Treasury Secretary Steven Mnuchin had supported an increase in the IRS’s budget during his confirmation hearings.
Mnuchin has said the IRS was “understaffed and under-resourced” and needs to increase its staff and modernize technology, the letter noted. He asked Congress to ensure the IRS can protect American taxpayers’ information from cybersecurity threats. “I can assure you that the president-elect understands the concept of ‘we add people, we make money.’ That’s a very quick conversation with Donald Trump,” said Mnuchin.
The House Democrats’ letter pointed that the IRS budget is currently $900 million lower than it was in fiscal year 2010 and the IRS is operating with 17,000 fewer full-time employees, thanks to what has effectively been a seven-year hiring freeze.
“The decline in taxpayer service and enforcement and the instability of underlying IT systems that support them threaten to undercut the basic voluntary compliance fabric of our tax system,” Ellison wrote. “A one-percent drop in the compliance rate translates into a revenue loss of approximately $30 billion per year, or $300 billion over the 10-year budget window. While this decline has been occurring, the number of individual returns filed has been growing by more than 10 million (or nearly 7 percent), from 141 million in FY 2010 to 153 million expected in FY 2017.”
The lawmakers noted the IRS has needed to deal over this period of time with legislation such as the Affordable Care Act, the Achieving a Better Life Experience Act, the Foreign Account Tax Compliance Act, the Protecting Americans from Tax Hikes Act, along with initiatives such as health coverage tax credits and private debt collection.
Ellison and other House Democrats pointed out the IRS’s technology is considerably out of date, as it deals with problems like identity theft and data breaches.
“In addition, as it tightened its belt, the IRS deferred investing or refreshing its existing IT infrastructure,” said Ellison. “As a result, 63 percent of IT hardware systems are now aged and out of warranty and 32 percent of its software products are two or more releases behind the industry standard, with l5 percent more than four releases behind. Additionally, the increasing number of cybersecurity threats and the need to modernize systems to protect one of the world’s most valuable data caches cannot be overstated.” He pointed out that in fiscal year 2016, the IRS experienced more than one billion attempts to infiltrate its systems and the number of identity theft cases has grown from 188,000 in fiscal year 2010 to 457,000 in fiscal year 2016.
The National Treasury Employees Union, which represents IRS employees, supported Ellison’s efforts on behalf of the IRS. “It is heartening to see that despite calls from the White House to gut agency budgets, there are those in Congress who understand the importance of providing the IRS the resources it needs to do the work on behalf of the American people,” NTEU national president Tony Reardon said in a statement. “With tax season approaching, now is the perfect time to remind everyone that slashing the IRS budget further would make it harder for honest taxpayers to file and easier for cheats to get away.”
