08/22/2019

Study Suggests Need for Higher IRS Budget

The IRS has long pleaded with Congress for additional funding

A new study in the American Accounting Association journal suggests that Internal Revenue Service (IRS) collections from audits of corporate tax returns have been severely hampered by congressional budget constraints on the agency. The IRS has long pleaded with Congress for additional funding to aid enforcement and collection efforts but has dealt with budget cuts for many years by a Republican-led Congress during the Obama administration.

Researchers who contributed to the AAA journal estimated the IRS could have collected more than $34.3 billion from 2002 through 2014 with roughly $13.7 more in enforcement resources.

“Using confidential IRS audit data, we examine the effect of IRS resources on the incidence and magnitude of proposed deficiencies and settlement outcomes,” the study’s authors wrote. “We find that IRS resources are positively associated with both the likelihood and magnitude of proposed deficiencies but negatively associated with the proportion of proposed deficiencies collected.”

In June, the House approved a spending bill that would provide $12 billion in funding for the IRS, an increase of nearly $700 million from fiscal 2019.

This article was provided to OSAE by the Power of A and ASAE's Inroads.