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The need for adequate funding of IRS: May 15, 2002.

On May 15, 2002, TEI President Robert L. Ashby sent the following letter to Senators Byron L. Dorgan and Ben Nighthorse Campbell, the chairman and ranking member, respectively, of the Subcommittee on Treasury and General Government of the Senate Appropriations Committee, concerning the appropriations of the Internal Revenue Service for the fiscal year 2003. A similar letter was also sent to Congressmen Ernest J. Istook, Jr., and Steny H. Hoyer, chairman and ranking member of' the Subcommittee on Treasury, Postal Service, and General Government of the House Appropriations Committee. The letter was drafted under the aegis of the Institute's IRS Administrative Affairs Committee, whose chair is David L. Bernard of Kimberly-Clark Corporation.

On behalf of Tax Executives Institute, I urge the Treasury and General Government Subcommittee of the Senate Appropriations Committee to ensure that the Internal Revenue Service receives adequate funding for its fiscal year 2003 operations.

TEI's 5,200 members are accountants, attorneys, and other business professionals who work for the largest 2,800 companies in the United States, Canada, and Europe. TEI's members work on tax issues, and with the IRS, on a daily basis. They are responsible for conducting the tax affairs of their companies and ensuring their compliance with the tax laws. TEI is dedicated to the development and effective implementation of sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike. The Institute is committed to maintaining a system that works--one that builds upon the principle of voluntary compliance and is consistent with sound tax policy, one that taxpayers can comply with, and one in which the IRS can effectively perform its audit function without unduly burdening taxpayers.

For fiscal year 2003, the IRS is requesting approximately $10.4 billion in funding, an increase of about $500 million (or 5 percent) over its appropriated level for 2002. The largest component of the increase is $259 million to enhance customer service and compliance, of which $196 million will be funded through the redeployment of resources. (Using its strategic planning and budget process, the IRS has already identified internal savings to permit significant resources to be redirected to higher-priority areas.) Of critical importance is the $450 million requested for the continuation of the agency's effort to re-engineer business processes and develop new business systems to replace its 60s-era technology.

In addition, the requested budget will fund certain employee retirement and health costs and employee pay raises, which were mandated, but not funded, in fiscal year 2002. Steps should be taken to ensure that any pay raise Congress ultimately adopts is fully funded to avoid diverting appropriated funds from needed programs.

As the preeminent association of business tax executives, TEI knows how critical it is to invest in and plan for the future. Our members know the importance of sound business processes and strict internal controls. Equally important, the companies represented by TEI's membership know that to be successful, they must plan ahead and ensure that adequate resources are devoted to core functions such as customer service and employee training. As a group, they applauded the decision to restructure the IRS to operate more like a business and to adopt a customer (i.e., taxpayer) satisfaction focus. We have also supported the IRS Oversight Board's review of the IRS's strategic plan and budget.

If the leaders of the IRS are to continue their efforts to rebuild the agency's credibility and effectiveness, the agency must be assured that the programs needed to implement its mission will be fully and consistently funded. Much has been accomplished under the IRS Restructuring and Reform Act. Improving customer satisfaction was a mandate of the 1998 act and the IRS is making progress. Indeed, two recent surveys show a strong turnaround in IRS public approval. As Commissioner Rossotti testified last month, however, "while the trend is positive, much more needs to be done." If the IRS is to succeed in reinventing itself as a modern, customer-focused agency, it must have adequate funding for its service initiatives. Of particular importance is maintaining the momentum of the modernization initiative, which will help the IRS deliver on its promise of better customer service. For these reasons, TEI recommends that the Administration's funding request for the IRS be approved and that any pay raise for employees be fully funded.

If you have any questions, please do not hesitate to contact Timothy J. McCormally, TEI's Executive Director, or Fred F. Murray, TEI's General Counsel and Director of Tax Affairs, at 202.638.5601.
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Article Details
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Author:Ashby, Robert L.
Publication:Tax Executive
Date:May 1, 2002
Previous Article:Withholding under Regulation 105: May 30, 2002.
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