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1 1 (November 16, 2020)

handle is hein.crs/govdcoe0001 and id is 1 raw text is: IRS Appropriations, FY2021 Updated November 16, 2020 The Internal Revenue Service (IRS) has two primary responsibilities: (1) to collect most of the revenueto fund federal government agencies andprograms, and (2) to enforce taxpayer compliance with federal taxlaws. According to the IRS Data Book, in FY2019, the agency processed over 253 million taxreturns and 3.5 billion information returns, collected over $3.5 trillion in gross revenue, andis sued $452billion in refunds. Appropriations provide most of IRS's operating budget. In FY2019, according to the agency's FY2021 budget request, 93% ($11,302 million) of its operating budgetcame from appropriations. The remaining 7% ($817 million) was from severalother sources, including (1) reimbursements from other government agencies for services rendered by the IRS, (2) offsetting collections, (3) user fees, and (4) carryovers ofunoblig ated balances fromprevious 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 taxgap 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 of2011 (BCA; P.L. 112-25, as amended). The requested exemption is known as a programintegrity cap adjustment. It permits Congress and the Administration to increase congressional allocations of annual appropriations for particular purposes. These purposes include activities to maintain programintegrity, such as boosting 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 fromthe deterrent effect on taxpayers fromincreas ed enforcement. The FY2021 budget proposalincludes $106.4 million to implement changes in IRS operations mandated by the Taxpayer First Act (P.L. 116-25). Among these changes aire creating an internet platformfor filing Form 1099s, allowing 100% e-filing by tax-exempt entities, setting a comprehensive service and training strategy and developing uniforms tandards for accepting electronic signatures. Table I. IRS's FY2020 and FY202 I Appropriations, Excluding Nonappropriated Funds (millions of dollars) FY2021 FY2021 FY2020 FY2021 House- Senate Account Enacted Request passed Drafta Taxpayer $2,512 $2,563 $2,603 $2,512 Services (TS) Enforce- 5,010 5,071 5,206 5,010 ment (EN F) Operations 3,809 4,105 4,058 3,809 Support (OS) Business 180 300 250 180 Systems Moderni- zation (BSM) Total $11,511 $12,039b $12,117 $11,511 Sources: IRS's FY2021 Budget Justification, H.R.7668, H.R. 7617, and Senate Appropriations Committee's summary of draft billfor Financial Services and General Government Appropriations, FY2021. a. As released by the Senate Appropriations Committee. No number has been assigned to the bill. b. Excludes $400 million in Program Integrity Initiatives underthe ENFand OS accounts. Taxpayerx Servi ces (TS) This accountcovers the cost ofprinting forms and publications, processing returns, filing and account services, and taxpayer assistance fromthe Taxpayer Advocate Service (TAS).

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