IRS With Smaller Budget Captures Less Through Enforcement

Enforcement actions by the Internal Revenue Service yielded $50.2 billion in fiscal year 2012 -- a 9 percent drop in part because of budget cuts, the U.S. tax agency’s inspector general said in a report today.

The IRS shed 8,000 full-time positions between 2010 and 2012 including 5,000 front-line enforcement workers, which is about a 14 percent reduction, said the report from the Treasury Inspector General for Tax Administration.

Some of the decline in collections may be the result of IRS policy changes. The agency’s Fresh Start Initiative was designed to reduce the number of tax liens filed and was created in response to concerns that the IRS was seizing property too aggressively.

The IRS also has been charged with implementing parts of the 2010 health-care law, diverting resources that could have been devoted to audits and collections.

IRS officials and Treasury Secretary Jacob J. Lew have argued for a budget increase in fiscal 2014, citing the risk of uncollected taxes from what they call counterproductive cuts. House Republicans have proposed a 24 percent budget cut.

Congress probably won’t resolve the agency’s funding levels until later in the year.

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