On Feb. 2, President Barack Obama presented his budget proposal for fiscal year 2016, which included a number of provisions that would impact tax reporting. One key point is the proposed budget would expand the IRS’ enforcement budget, giving the agency the funding it needs to close the tax gap and bolster the Treasury Department’s revenue.
According to The Washington Post, Obama’s proposal would restore a significant amount of funding to the IRS – enough to counter the waves of budget cuts the agency has suffered in recent years. This renewed funding would bring the IRS within 5 percent of its 2010 spending power, with the brunt of the additional stimulus going to services for taxpayers and cracking down on tax evasion.
Improving enforcement for all
The proposed funding would be $12.9 billion, The Hill reported. Compared to the $10.9 billion Congress granted for this fiscal year, this would be 18 percent higher.
“Reforms to the business and – especially – international tax system depend on an IRS that is capable of going toe-to-toe with high-paid tax lawyers and accountants to enforce the law and make sure corporations, the wealthiest and ordinary American workers all play by the same rules,” the Obama administration said, according to the source.
Changing the tide
Obama’s proposal is welcome news considering the IRS faces a number of issues as a result of the budget cuts. Taxpayer assistance services are slim, enforcement is lagging and an IRS shutdown could be in the cards. Additionally, the agency is dealing with staff reductions while attempting to comply with a mandated 1 percent raise for its employees.
Of course, changes are just part of a proposal, which Congress must approve if the improved funding is to come to fruition. If the agency has a revitalized enforcement budget, that means all taxpayers must do their due diligence to completely and accurately meet their tax compliance obligations.
Both Forbes and The Hill said the proposed funding increase will meet some opposition in Congress. While this may be true, the president appears set on his goal. Plus, the Post reported the Treasury Department could obtain $10 billion in additional revenue with more IRS funding. With these possible gains for the department’s budget, taxpayers must prepare for the possibility of more scrutiny when they file tax information.
