September 28,2004

Baucus Raises Concern About IRS Ability to Enforce Tax Laws and Provide Taxpayer Service

(WASHINGTON, D.C) -- Today, U.S. Senator Max Baucus, Ranking Member of the SenateFinance Committee, released a letter from the Internal Revenue Service (IRS) Commissioner,Mark Everson, highlighting the effect of reducing the administration’s fiscal year 2005 budgetrequest for the IRS. Commissioner Everson responded to a September 7th letter sent by SenatorBaucus inquiring about the effects on tax administration of Congress’ proposed cuts to the IRSbudget. In his letter, the Commissioner provided specific examples of what IRS would not beable to accomplish with a reduced budget.

Last July, the Senate Finance Committee held a hearing on the tax gap, which is thedifference between the amount of taxes taxpayers owe to the government and the amount oftaxes that taxpayers voluntarily pay. The current, annual tax gap is estimated at $311 billion, ofwhich only $55 billion will be collected through enforcement efforts. According toCommissioner Everson, the cut of $382 million proposed by the House AppropriationsSubcommittee on Transportation, Treasury, and Independent Agencies will have adverse affectson the IRS’s efforts to ensure compliance.

In releasing the letters, Senator Baucus issued the following statement:

“As part of the IRS Reform Act of 1998, Congress committed to support IRS in its efforts to collect the nation’s taxes and provide quality taxpayer service. Congress must provide the IRS with the support and tools to enforce the tax code. Failure to do so will jeopardize the agency’s ability to stem non-compliance through enforcement and taxpayer service.”

The full text of the letter to Commissioner Everson from Senator Baucus and theCommissioner’s response can be found on the Senate Finance Committee’s website on SenatorBaucus’ press release page at http://finance.senate.gov.

###