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1 1 (January 14, 2020)

handle is hein.crs/govbfzu0001 and id is 1 raw text is: 01;0 'iE ,- . $ ,: . p\w gnom ggmm mppm qq\ , q I aS 11LULANJILiN, Updated January 14, 2020 Internal Revenue Service Appropriations, FY2020 The Internal Revenue Service (IRS) has two primary statutory responsibilities: (1) to collect most of the revenue required to fund the federal government agencies and programs, and (2) to enforce taxpayer compliance with federal tax laws and regulations. In FY2018, the agency processed 250.3 million tax and information returns (not including Form 1099 returns) and collected $3.5 trillion in gross revenue. Appropriations provide the vast share of operating funds for the IRS. In FY2018, 93% ($11.4 billion) of its budget came from appropriations. The remaining 7% ($850 million) stemmed from several sources, over which the IRS has unlimited authority regarding the use of the funds: reimbursements from other government agencies for services rendered by the IRS, offsetting collections, user fees, and carryovers of unobligated balances from previous years. Historically, IRS's appropriated funds have been distributed among four accounts: taxpayer services (TS), enforcement, operations support (OS), and business systems modernization (BSM). As Table 1 shows, enforcement represented 43% of the $11.303 billion in enacted appropriations for FY2019, followed by OS (33%), TS (22%), and BSM (1%). Congress included another $77 million in FY2019 to allow the IRS to continue implementing the many changes to the federal tax code made in 2017 by P.L. 115-97. The Trump Administration requested $11.472 billion in appropriations for the IRS in FY2020, or $169 million more than the enacted amount for FY2019. This increase represented the net result of cost savings from several efficiency measures and the discontinuation of the $77 million in funding for implementing the provisions of P.L. 115-97, and added spending of $180 million for the BSM program, $34 million for enhanced data analytics, $22.5 million for identity theft prevention, and $107 million for cybersecurity enhancement and maintaining and upgrading IRS's information systems. In addition, the Administration requested additional funding in FY2020 for enforcement activities ($200 million) and operations support ($162 million) through a program integrity cap adjustment under Section 25 1(b)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA; P.L. 99-177). Congress would have had to approve the adjustments before the associated funds could be spent. The added funds, along with proposed cap adjustments in future years, would have been used to pay for continuing investments in expanding and improving the effectiveness and efficiency of the IRS's overall tax enforcement program. According to the IRS budget request, these investments would have resulted in a gross revenue gain of $47.1 billion over 10 years, at a total cost of $14.5 billion, yielding a net revenue gain of $32.6 billion. This estimate did not account for the revenue effects of added enforcement initiatives on taxpayer noncompliance. At the end of 2019, the Consolidated Appropriations Act, 2020 (P.L. 116-93) was enacted. It appropriated $11.511 billion for the IRS, which was $39 million (0.3%) more than the budget request and $208 million (1.8%) more than the enacted amount for FY2019. The same act mandated a 3.1% pay increase for federal civilian workers. Given that two-thirds of the IRS's budget goes to employee compensation, the pay increase might effectively absorb much of the 1.8% increase in IRS appropriations in FY2020. Table I. IRS's FY2019 and FY2020 Appropriations, Excluding Nonappropriated Funds (millions of dollars) FY2019 FY2020 FY2020 Account Enacted Request Enacted Taxpayer $2,492 $2,402 $2,512 Services Enforcement 4,860 4,705 5,010 Operations 3,724 4,075 3,809 Support Business 150 290 180 Systems Modernization Administrative 77 - - Provision Total $11,303 $11,472 $11,511 Sources: IRS's FY2020 Budget Justification and Consolidated Appropriations Act, 2020 (P.L. I 16-93). The Administration's FY2020 budget request included $2.402 billion for TS. Of the requested amount, $8.9 million was set aside for the Tax Counseling for the Elderly Program (TCEP); $12 million for low-income taxpayer clinic (LITC) grants; $15 million for matching grants under the Community Volunteer Income Tax Assistance (VITA) program (available until September 30, 2021); and $206 million for the Taxpayer Advocate Service (TAS), of which

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