The House and Senate passed the Treasury appropriations bill for next year, allocating a budget of $10.7 billion for the Internal Revenue Service, a $434 million increase from 2005 that will mostly be directed to enforcement efforts.

The bill includes almost $7 billion for general tax enforcement activities, an 8 percent increase over the 2005 fiscal year.

The IRS's 2006 fiscal year budget breaks down into five main categories. The legislation includes $4.7 billion for tax law enforcement, up $300 million from 2005; $4.1 billion for processing, assistance and management, up $80 million in 2005; and $1.6 billion for information systems, a $20 million increase. The agency's technology modernization effort budget will be trimmed slightly, to about $200 million; and funding for administration of the health insurance tax credit will be cut by $14 million, to $20 million.Negotiations between the chambers led the House to include about $200 million more for enforcement than representatives originally requested, and eliminated a Senate provision that would have prevented the IRS from competing with private industry to provide tax preparation services. Conservatives had lobbied for the provision to prevent a "conflict of interest" for the IRS, while opponents of the provision said that the Free File Alliance, which includes software providers, already made the provision unnecessary.

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