Welcome to the Subcommittee on Oversight’s annual hearing on the Internal Revenue Service’s operations and budget.
Just last week, million of taxpayers across America scrambled to meet their tax filing obligations by April 15. That was no easy feat. Every year, taxpayers face a tax code of growing complexity. Indeed, there have been nearly 5,000 changes to the tax code in the past ten years. As a result of the growing length and complexity of the tax code, individual taxpayers and businesses spend an estimated 6.1 billion hours and $163 billion every single year simply complying with tax-filing requirements.
These burdens aren’t the taxpayers’ alone. The IRS is tasked with processing the nation’s tax returns and administering our broken tax code. At the same time, the IRS must deliver expert customer service to the millions of honest taxpayers who turn to it for assistance. But more, the agency has to execute its core mission will managing increasing responsibilities to run social policy programs such as ObamaCare.
Despite all of this, the IRS managed to wrap up the 2013 filing season with efficiency and few delays. Although the 2013 filing season was delayed due to preparations for tax law changes, the IRS processed over 93 million individual tax returns and issued $214.5 billion in refunds to over 77.8 million taxpayers. I commend you for managing IRS’s resources to ensure there was no break in service during the tax-filing season. We will want to hear how the IRS was able to do more with less this year.
As part of our review of the 2013 tax-filing season, we will also discuss the IRS’s response to a sharp increase in reports of identity theft so far this filing season. Every year, tax fraudsters set out to steal millions of dollars in phony tax refunds. Everyday, hardworking Americans are the victims of these schemes that oftentimes hold up legitimate tax returns and refunds. Today, we will talk about what the IRS is doing to detect and prevent identity theft and tax fraud.
In March, Congress adopted a spending measure at the sequestration level of spending for the balance of the fiscal year. I am proud that Congress was able to cut spending for real. That said, I know that the transition to this new spending level involves management challenges. We will discuss the IRS’s operating plans for this year and also examine how the IRS can avoid wasteful spending.
Rather than seeking to tighten spending and be more responsible with taxpayer dollars, the Administration’s 2014 budget request goes in the opposite direction. It is a budget that, literally, never balances.
For its part, the IRS has requested nearly $13 billion dollars for FY 2014, an increase of more than a billion dollars over the 2012 enacted rate. Included is a request for 6,287 additional employees. This significant demand for new personnel arises in part from the fact that the IRS has been given two competing responsibilities: revenue collector and social program administrator.
The biggest contributor to this problem is the President’s health care law. The Administration’s FY 2014 budget request acknowledges this—more than 803 employees have already been sucked out of the agency’s enforcement, operations, and customer services accounts to implement ObamaCare. This budget seeks 1,151 more, for a total of 1,954.
Even as the IRS has made progress with taxpayer ID theft and improper payments, it has acknowledged it can do more; the truth is that ObamaCare is pulling the IRS away from its core mission.
I look forward to hearing Acting Commissioner Miller’s testimony.