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1 1 (August 26, 2020)

handle is hein.crs/govdblx0001 and id is 1 raw text is: IRS Appropriations, FY2021 - mmm, go mppm qq\ , q I aS 11LULANJILiN, Updated August 26, 2020 Overview of Budget Request The Internal Revenue Service (IRS) has two primary responsibilities: (1) to collect most of the revenue to fund federal government agencies and programs, and (2) to enforce taxpayer compliance with federal tax laws. According to the IRS Data Book, in FY2019, the agency processed over 253 million tax returns and 3.5 billion information returns, collected over $3.5 trillion in gross revenue, and issued $452 billion in refunds. Appropriations provide most of the IRS's operating budget. In FY2019, according to the agency's FY2021 budget request, 93% ($11,302 million) of its operating budget came from appropriations. The remaining 7% ($817 million) was from several other sources, including (1) reimbursements from other government agencies for services rendered by the IRS, (2) offsetting collections, (3) user fees, and (4) carryovers of unobligated balances from previous years. The IRS has unrestricted authority over how nonappropriated funds are used. Historically, IRS appropriations have been distributed among four accounts: taxpayer services (TS), enforcement (ENF), operations support (OS), and business systems modernization (BSM). As Table 1 shows, enforcement accounted for 43.5% of the $11,511 million in enacted appropriations for FY2020, followed by OS (33.0%), TS (22%), and BSM (1%). The Trump Administration has requested $12,039 million in IRS appropriations for FY2021, or $528 million (4.6%) more than the enacted amount for FY2020. Relative to enacted amounts for FY2020, funding for OS would rise by $196 million (7.8%), for BSM by $120 million (66.7%), for ENF by $61 million (1.2%), and for taxpayer services by $51 million (2.0%). The Administration is also proposing to make more funding available for reducing the federal tax gap by asking Congress to exempt a total of $400 million of the proposed budget ($280 million for ENF and $120 million for OS) from the FY2021 caps on nondefense discretionary spending under the Budget Control Act of 2011 (BCA; P.L. 112-25, as amended). The requested exemption is known as a program integrity cap adjustment. It permits Congress and the Administration to increase congressional allocations of annual appropriations for particular purposes. These purposes include activities to maintain program integrity, such as efforts to improve a program's effectiveness by enforcing compliance with its regulations. According to budget documents, the proposed $400 million cap adjustment in FY2021, together with proposed annual cap adjustments through FY2030, would result in a net revenue gain of $64 billion in that period. This estimate does not take into account the revenue gain from the deterrent effect on taxpayers from increased enforcement. The FY2021 budget proposal includes $106.4 million to implement changes in IRS operations mandated by the Taxpayer First Act (P.L. 116-25). Among these changes are creating an internet platform for filing Form 1099s, allowing 100% e-filing by tax-exempt entities, setting a comprehensive service and training strategy and developing uniform standards for accepting electronic signatures. Table I. IRS's FY2020 and FY2021 Appropriations, Excluding Nonappropriated Funds (millions of dollars) FY2021 FY2020 FY2021 House- Account Enacted Request passed Taxpayer $2,512 $2,563 $2,603 Services (TS) Enforcement 5,010 5,071 5,206 (ENF) Operations 3,809 4,105 4,058 Support (OS) Business 180 300 250 Systems Modernization (BSM) Total $11,511 $12,039a $12,117 Sources: IRS's FY2021 Budget justification, H.R. 7668, and H.R. 7617. a. Excludes $400 million in Program Integrity Initiatives under the ENF and OS accounts. Specific Appropriations Accounts Tauxpayer Sevcs(TS) This account covers the cost of printing forms and publications, processing returns, filing and account services, and taxpayer assistance from the Taxpayer Advocate Service (TAS). The Administration is asking for $2,563 million in FY2021 for TS, or $51 million more than the enacted amount for FY2020. Of this amount, $11 million would be set aside for the Tax Counseling for the Elderly Program, $12 million for low-income taxpayer clinic grants, and $25 million (available through the end of FY2022) for matching grants in the Community Volunteer Income Tax Assistance -------------------.-,'*-' * ...*.~

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