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August 7, 2014
House Amendments Slash IRS Budget
by Luca Gattoni-Celli

Full Text Published by Tax Analysts®

This document originially appeared in the July 16, 2014 edition of Tax Notes Today.

The House late July 14 approved more than $1.1 billion in further cuts to the IRS budget -- a 10 percent reduction to a package that IRS officials had already said would harm the Service's ability to fulfill its duties.

Ways and Means Committee Chair Dave Camp, R-Mich., said on July 15 that lawmakers will continue to use their appropriations authority to pressure the IRS for full information about the agency's treatment of conservative nonprofit groups.

The cuts, which focused primarily on enforcement, were added as amendments to H.R. 5016, the fiscal 2015 budget bill for financial services and general government, which funds the IRS and the Treasury Department. The version of H.R. 5016 that the House Appropriations Committee approved in June would have given the IRS $10.95 billion, which represented a 3 percent cut to the agency's enacted budget for fiscal 2014. At the time, the IRS warned that a reduced budget would "deepen service cuts to the nation's taxpayers and hamper efforts to collect enforcement revenue."

The House was expected to continue its consideration of the bill and vote on final passage on July 16.

An amendment offered by Rep. Bill Huizenga, R-Mich., proposed to reduce funding for enforcement at the IRS by $788 million. Rep. Paul A. Gosar, R-Ariz., proposed to shift $353 million of funding from operations support, and Camp proposed to reduce funding for operations support at the IRS by $2 million. All three amendments directed the funds to a spending reduction account designed to make the reductions irreversible. Rep. Marsha Blackburn, R-Tenn., also proposed a $2 million cut to the agency's enforcement budget. The amendments were all approved by voice vote, according the House clerk's office.

The House adopted on a 338-80 vote another amendment July 15, by Ways and Means member Peter J. Roskam, R-Ill., to increase funding for taxpayer services at the IRS by $10 million and reduce funding for enforcement by the same amount.

The House also approved by voice vote an amendment by Rep. Rosa L. DeLauro, D-Conn., to prohibit funds from being spent on contracts to corporations incorporated or chartered in Bermuda or the Cayman Islands that were previously incorporated in the United States. DeLauro has added similar amendments to other recent appropriations packages.

Camp said the appropriations process is a legitimate means to pressure the agency. "I think there's a strong sense among members that the IRS has not begun to address [its] problems," and until it does, the House will exercise oversight through appropriations, he said.

Democrats did not insist on roll call votes for the July 14 amendments because they saw common ground over the need for the IRS to reform, Ways and Means member John B. Larson, D-Conn., said. "When something reaches the [unanimous] consent calendar it usually means it's worked through the process so that both sides are in agreement," Larson told Tax Analysts.

The White House issued a veto threat against H.R. 5016 on July 14, before the late cuts to IRS funding, saying the House was providing $1.5 billion less for the Service than the administration requested in its fiscal 2015 budget. The White House said the House's proposal would reduce the quality of taxpayer services, impede the implementation of policies such as those enacted in the Affordable Care Act, and increase the deficit by undermining enforcement and collection efforts.

Camp responded to the White House by citing a lack of transparency at the agency. "We need to get to the bottom of the IRS targeting people for their political beliefs, and until we get all the facts, all the information," Congress will continue to apply funding pressure, he said.

The following amendments to H.R. 5016 were also adopted, all by voice vote:

  • by Rep. Tim Walberg, R-Miss., to prohibit funds from being used by the IRS in contravention of the Federal Records Act, as the Service is accused of having done when it failed to report the loss of some of former official Lois Lerner's e-mails;
  • by Rep. Blake Farenthold, R-Texas, to prohibit funds from being used to pay the salary of any federal employee who has been held in contempt of Congress, as Lerner has been by the House;
  • by Rep. Alan Grayson, D-Fla., to redirect an additional $2.8 million within the IRS from services to the tax counseling for the elderly program;
  • by Rep. Sheila Jackson Lee, D-Texas, to increase funding for community development financial institutions by $500,000 and reduce IRS taxpayer services funding by $1 million; and
  • by Rep. Bill Posey, R-Fla., to increase funding for the Treasury Inspector General for Tax Administration by $1 million and reduce funding for IRS enforcement by the same amount.

The Senate Appropriations Financial Services and General Government Subcommittee marked up a companion bill to H.R. 5016 on June 24, but a Senate Appropriations Committee staff member said that no full committee markup had yet been scheduled. The official fiscal 2015 appropriation measure list maintained by the Library of Congress showed no Senate IRS funding bill text at press time.

Follow Luca Gattoni-Celli (@TheGattoniCelli) on Twitter for real-time updates.

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