House Appropriations Panel Approves $10.1-Billion FY 2016 Budget for IRS

The House Appropriations Committee on June 17 approved a fiscal year (FY) 2016 appropriations bill to provide $20.2 billion in annual funding for the Treasury Department, the Judiciary, the Small Business Administration, the Securities and Exchange Commission and several other agencies. The measure, which passed by a vote of 30 to 20, includes $10.1-billion to fund the IRS for FY 2016, which represents a cut of approximately $838 million, compared to FY 2015.

Reduced Funding

Rep. Ander Crenshaw, R-Fla., chairman of the Appropriations Subcommittee on Financial Services and General Government, explained that his subcommittee had increased funding for certain initiatives, such as the High Intensity Drug Trafficking Areas (HIDTA) program, the Treasury Office of Terrorism and Financial Intelligence and the Small Business Administration. These increases, however, required reductions from the budgets of more than two dozen other federal agencies, in particular the General Services Administration (GSA) and the IRS. “They’re the two largest agencies that we oversee and, frankly, they both have recent histories of inappropriate behavior,” Crenshaw explained, referring in part to the Treasury Inspector General for Tax Administration’s report finding that the IRS had inappropriately delayed processing the applications of certain politically conservative groups for tax-exempt status under Code Sec. 501(c)(4).

“The IRS received…$2.8 billion below their request [for FY 2016], but it requires the IRS to make customer service a big priority,” Crenshaw said. He acknowledged that the bill would fund the IRS at 2004 levels, but argued that the cuts would force the IRS to be more efficient in its spending. The bill would also introduce several prohibitions and oversight provisions, such as the requirement that the IRS consider conduct and tax compliance prior to awarding bonuses, promotions or making hiring decisions. Crenshaw also noted that the bill provided the IRS with $75 million to improve customer service.

Different Views

The opening remarks of lawmakers regarding the IRS provisions of the budget bill were largely split across partisan lines. Rep. José E. Serrano, D-N.Y., noted that the bill put forward by the subcommittee would allocate 6-percent less than the amount allocated for FY 2015. “No other subcommittee has such a large percentage cut from their allocation. The result is that numerous agencies are severely underfunded.”

Serrano particularly criticized the bill’s appropriations to the IRS, which would bring the Service down to the same funding level it had in 2004, when it had fewer taxpayers and fewer responsibilities to oversee. “Once again, this is a misguided attempt by the majority to do two things: punish the entire agency for the problems regarding 501(c)(4) investigations and prevent the full implementation of the [Patient Protection and] Affordable Care Act (P.L. 111-148).”

Rep. Nita Lowey, D-N.Y., agreed with Serrano, attributing the proposed IRS budget cuts for FY 2016 to harmful partisanship. Lowey warned that the cuts would only serve to protect tax cheats and prevent law-abiding citizens from receiving the service they deserve.

Committee Chairman Hal Rogers, R-Ky., on the other hand, called the bill an “excellent bill” and advocated in its favor. Regarding the IRS, Rogers stated that the Service had been less than responsible with its budget over the past few years. “For an agency that is tasked with collecting taxes from the paychecks of hardworking Americans, this is entirely unacceptable,” said Rogers. He added that the cuts to the IRS’s budget would force it to streamline its operations and cut down on wasteful spending.

Amendments

Following opening remarks, lawmakers voted on amendments to the bill, which will now head to the House floor for consideration. One amendment concerned the IRS and its audits of tax-exempts organized under Code Sec. 501(c)(3). The amendment, which the full committee adopted on a vote of 30 to 19, was proposed by Rep. John Culberson, R-Tex. It would prohibit funding for the IRS to audit a faith-based Code Sec. 501(c)(3) tax-exempt organization, unless the audit is approved the IRS commissioner.

“My amendment simply puts certain procedural safeguards in place to ensure that only the IRS commissioner can threaten the tax-exempt status of a church, and then only after notifying the Ways and Means Committee in the House and the Finance Committee in the Senate 30 days in advance. Any revocation would only take effect 90 days after such notice,” Culberson explained.

By Jennifer Cordaro, Wolters Kluwer News Staff

 

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