APA Advocates for
Increased IRS Funding
By Alice P. Jacobsohn, Esq.
During his nomination hearings as Treasury Secretary, Steven Mnuchin cited as priorities increasing staff and modernizing technology at the Internal Revenue Service (IRS). For years, APA has considered these to be critical issues. To reinforce that message, APA's Government Relations Task Force (GRTF) Subcommittee on IRS Issues sent a letter to Congress this month asking for increased funding.
As a nonprofit professional association serving the interests of payroll professionals, one of APA's primary missions is to reduce the administrative burden on payroll departments. With approximately 67% of the funds coming into the IRS annually through employers and payroll processing, the IRS must be sufficiently funded to ensure effective operations.
"APA appreciates the role the U.S. House of Representatives and U.S. Senate play regarding the federal budget and the challenges of ensuring adequate agency funding while properly managing Americans' tax dollars," the GRTF Subcommittee wrote. "For this reason, we urge you to consider increasing vital funding for the IRS."
The IRS plays a critical role in enforcing federal tax law to secure financing for a myriad of federal programs, including national defense, highway building and maintenance, veterans' benefits, medical research, and disaster relief. In addition, collected revenue reduces the national deficit. The agency also is required to implement laws for which funding was not allocated, such as the Affordable Care Act (ACA) and Foreign Account Tax Compliance Act. Discussions on repeal and replacement of the ACA include tax incentive measures that, if enacted, will require IRS support. Without additional investment, resources must be shifted from other critical IRS programs, which is not in the interest of employers.
"Since 2010, the IRS has undergone an 18% reduction in funding," the APA stated. "The business community has suffered as a result because agency staff are not always available to provide support and technology systems are not advanced sufficiently to respond to business tax needs."
Communication and Preventing Identity Theft
The Future State, the IRS's title for an evolving strategic plan, involves significant work on digital communications, including functions for secure messaging, chat rooms (text, voice, and video), and co-browsing (joint navigation of a document or website by two or more people accessing it at the same time). A pilot program for individual taxpayers is under way, with employer and tax practitioner functions coming later. For these communication systems to be successful, the agency must have resources.
APA emphasized, "For the business community, improved electronic communication systems with the IRS provides a clear advantage over manual intervention for filing tax and information returns, as well as responding to taxpayers. A well-designed infrastructure that prevents cyber-attacks requires resources both in technology and human capital. Unfortunately, identity thieves and tax fraudsters are continuously altering their methods."
Business stakeholders, such as the APA and its members, are working closely with the IRS on measures to prevent these attacks, but we see that the IRS lacks the necessary resources to be successful. For example, the digital communication system the agency is creating now cannot remain stagnant if it is to keep up with cybersecurity and technology advancements. Therefore, any funding used now in the initial development stages will need to be renewed regularly.
Closing the Tax Gap
During the 2016 campaign, many candidates and sitting lawmakers expressed concern that all taxpayers should pay their fair share, as required by law. Regardless of any tax reform measures, this concern remains the same. IRS Commissioner John Koskinen has said many times that even a 1% drop in compliance can cost the Treasury $30 billion a year.
Budget cuts are hampering the IRS's capability to enforce our tax laws. This means that tax dollars already owed go uncollected because the IRS lacks the resources to track down tax evaders.
"This also raises a fairness issue for taxpayers who pay their required taxes on time," APA stated. "For APA members, sufficient IRS funding for enforcement activity levels the playing field by ensuring that competitors not only pay their taxes, but the same administrative costs for completing forms, working with employees, and reporting."
Taxpayer Bill of Rights
In addition, resources are critical for the IRS's ability to maintain the Taxpayer Bill of Rights, in which the right to know what taxpayers need to do to comply involves "the right to receive prompt, courteous, and professional assistance in dealing with the IRS." Cuts to the IRS's budget seriously threaten these rights. The agency's training budget is down 85% since 2009. This means the capability to answer taxpayer questions is greatly hampered.
With the need for improved spending policies and tax reform, adequately funding the IRS is even more important. The APA urged Congress to ensure that business taxpayers receive the information they need to file and pay their taxes on time and to obtain timely and quality service from the IRS.
Alice P. Jacobsohn, Esq., is Senior Manager of Government Relations for the APA.