President Bush’s 2008 budget has tabbed $11.4 billion for the Internal Revenue Service, a direct appropriation increase of 6.3 percent from the agency’s 2007 budget.

The budget also includes $133 million from reimbursable programs and another $180 million in user fees.

Beginning with the current year’s budget, the agency has realigned its operating appropriations into three new accounts -- taxpayer service, enforcement and operations support -- all of which are designated for increases under the president’s budget. Taxpayer service has proposed funding at $2.1 billion (up nearly $60 million from the president’s 2007 budget), enforcement funding at $4.9 billion (up about $265 million) and operations support at $3.5 billion (up about $250 million).

The operations support line is receiving the largest percentage increase, with a direct appropriation increase of 7.1 percent. Enforcement spending is up 5.7 percent, while taxpayers services is due to receive a 2.7 percent increase. The agency has also requested a separate direct appropriation of $282 million for its ongoing business systems modernization program.

Adjustments to the IRS’s current 2007 budget include efficiency savings of nearly $120 million and the elimination of nearly 1,200 full-time-equivalent positions. The agency also reinvested some $6.5 million in severance pay and support costs for the ramp down of the Philadelphia Processing Center -- although a staff of service and enforcement personnel will stay in the city.

At a macro level, the Treasury said the IRS’s budget request part of the agency’s strategy to improve taxpayer compliance by:

  • Implementing legislative and regulatory changes;
  • Increasing front-line enforcement resources;
  • Increasing voluntary compliance through improved taxpayer service options and enhanced research; and,
  • Investing in technology to reverse infrastructure deterioration, accelerate modernization and improve the productivity of existing resources.

The Department of the Treasury’s 2008 budget, including the IRS’s request (beginning on page 52), is available at www.treas.gov/offices/management/budget/budgetinbrief/fy2008/bib.pdf.

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