NCPA - National Center for Policy Analysis

Shifting Personnel At The IRS

March 1, 1999

The Internal Revenue Service is trying to implement more than 1,200 changes in the nation's tax law, to restructure itself and its information systems, and to deal with the Y2K problem -- all with a budget likely to be close to last year's. Agency officials have asked for $8.1 billion in funding, which they describe as the "bare minimum."

To cope with its additional responsibilities, it will shift personnel from certain areas -- primarily from enforcement, which the IRS calls "compliance."

  • About 2,400 of the agency's roughly 95,000 workers will be involved in the shift.
  • The IRS contends that each $1 spend on compliance produces $4 of revenue.
  • So the shift could produce losses of $500 million -- although the figure is open to question.
  • In any case, there has been a 25 percent decline in enforcement personnel over the past decade, and a high- income taxpayer's chance of being audited has gone down 80 percent.

The latest estimate of the "tax gap" -- which is the difference between what the government would collect if everyone filed a complete and accurate return and what is in fact paid voluntarily each year -- stands at $195 billion.

Source: Albert B. Crenshaw, "Reform Could Prove Overtaxing for IRS," Washington Post, February 29, 1999.

 

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