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IRS Oversight Board Releases Special Report on IRS FY2011 Budget

Calls for Increases to Improve Toll-free Phone Service, Maintain Volunteer Programs,
and Support Infrastructure Needs

 (Washington, DC)The IRS Oversight Board today released a special report on the IRS FY2011 budget, calling for a funding level of $12.914 billion, which is an increase of $767.7 million over the previous year’s enacted budget. The Oversight Board’s recommendation is $280.6 million, or 2.2 percent, above that of the President’s request.

Despite the difference, the Oversight Board’s recommendations and the President’s budget request agree on many points. Notably, both agree on $5.8 billion for IRS enforcement; $387.0 million for the Business Systems Modernization (BSM) program; and inflation adjustments, savings, and reinvestments.

However, the Oversight Board calls for additional resources in taxpayer service and operations support. Specifically, the Board recommends:

  • Taxpayer Service funded at a level of $2.374 billion instead of the $2.322 billion requested in the President’s budget, a difference of $51.6 million.
  • Operations support funded at a level of $4.337 billion instead of the $4.108 billion requested in the President’s budget, a difference of $229.0 million.

The report states that improvements in taxpayer service are needed to provide taxpayers with the help they need to make compliance easier. The Board voiced particular concern regarding the level of service (LOS) on IRS toll-free telephones. Increased demand caused service levels to fall to 53 percent in FY2008 and 70 percent in FY2009. The Board’s budget recommendations result in an estimated LOS on toll-free telephones of 80 percent in FY2011 compared to the President’s budget, which results in an estimated LOS of 75 percent.

The Board also does not support the President’s request to roll back funding for several programs that benefit the elderly and low-income taxpayers, and calls for an additional $9 million to support the Taxpayer Advocate Service, the Low Income Tax Clinic grants program, the Tax Counseling for the Elderly program and the Volunteer Income Tax Assistance (VITA) grants program. Board members have met with VITA organizations in Salt Lake City, Atlanta, Kansas City, Chicago, New York City, Boston, Pittsburgh, Dallas, Las Vegas, and San Antonio, and can attest to the worthwhile services these organizations provide.

The Board recommends a total of $4.337 billion for Operations Support versus the $4.108 billion requested by the President. The report points out that nearly half of the Operations Support budget is used to fund operation, maintenance, and on-going development of IRS legacy information technology operations, such as its mainframe computers, servers, telecommunications networks, security systems, laptops, and applications programs that fall outside the BSM program. The report states that “The BSM program, by itself, cannot modernize the IRS. Modernizing the IRS also requires upgrading an aging information technology infrastructure. The Board believes that more resources are needed.” 

In the report, the Board says that it believes that immediate benefits will outweigh additional costs. “Improvements in infrastructure are needed to provide a long-term investment in the IRS’ ability to transform itself into a more data-driven enterprise. Such a transformation will make the IRS more effective and efficient, lessen taxpayer burden, and provide the country with a stronger tax administration system better able to serve taxpayers and adapt to change.”

The report can be downloaded at www.irsoversightboard.treas.gov.

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