IRS Chief Tells U.S. Lawmakers House's Spending Cuts Would Help Tax Cheats

Internal Revenue Service Commissioner Douglas Shulman told lawmakers that the House- passed spending bill would weaken his agency’s ability to fight tax cheating.

If the bill passed Feb. 20 becomes law, the “IRS would need to make substantial immediate cuts to its enforcement programs,” Shulman said during a House appropriations subcommittee hearing today in Washington.

The House spending bill for the rest of fiscal 2011, which is opposed by Senate Democrats and President Barack Obama, would cut $603 million from the IRS’s fiscal 2010 spending level of $12.1 billion, Shulman said. Those cuts would cost the government $4 billion in collected revenue, Shulman said.

The hearing highlighted the conflict between the House Republican majority’s push to reduce spending and the Obama administration’s proposed funding increases for some agencies, including the IRS.

Shulman’s comments about the still-unsettled 2011 budget came as he pushed House lawmakers to support the agency’s $13.3 billion budget request for fiscal 2012.

‘Pay for Themselves’

“The investments in our budget more than pay for themselves and directly contribute to deficit reduction,” he said.

In the fiscal 2012 budget released Feb. 14, Obama proposed increasing the IRS budget by 9.4 percent from 2010 levels and hiring more than 5,000 employees.

Photographer: Jay Mallin/Bloomberg

“The investments in our budget more than pay for themselves and directly contribute to deficit reduction,” IRS Commissioner Douglas Shulman told lawmakers. Close

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Photographer: Jay Mallin/Bloomberg

“The investments in our budget more than pay for themselves and directly contribute to deficit reduction,” IRS Commissioner Douglas Shulman told lawmakers.

That budget proposal includes new efforts to enforce the tax code by focusing on offshore accounts and tax cheating. The IRS also will be taking on new responsibilities as part of the health- care law, which uses the tax code to distribute health insurance subsidies.

Representative Jo Ann Emerson of Missouri, chairwoman of the Appropriations subcommittee that oversees the IRS budget, said she was seeking to make “informed and judicious” cuts.

To contact the reporter on this story: Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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