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Washington, D.C.—The failure of the administration to request an adequate budget for the Internal Revenue Service (IRS) stands in the way of this critical agency meeting both its customer service and enforcement needs, the leader of the union representing thousands of IRS employees told a House subcommittee today.

“Although it is widely recognized that additional funding for enforcement provides a great return on investment,” said President Colleen M. Kelley of the National Treasury Employees Union (NTEU), “the administration seems reluctant to request an adequate budget for the IRS.”

What’s more, she said in testimony submitted to the House Ways and Means Oversight Subcommittee, “despite citing a lack of resources as the primary rationale for contracting out a number of inherently governmental functions—such as the collection of taxes—the commissioner of the IRS has told Congress that the IRS does not need any additional funding above the president’s budget request.”

President Kelley said NTEU believes that Congress must provide the IRS with a budget that will allow the agency “to replenish (its) depleted workforce, particularly with respect to enforcement personnel.” Only then, she said, will the IRS be able to address in a meaningful way the multi-billion-dollar and growing gap between taxes owed and taxes paid. This ‘tax gap’ is put at more than $290 billion a year.

Along with fostering an inability to shrink the tax gap, the NTEU leader said an inadequate budget leads the IRS to pursue such misguided programs as the hiring of private sector debt collectors to pursue tax debts, and the placing of severe time and scope limits on the ability of experienced employees to audit business tax returns, particularly the returns of large corporations.

“Revenue Agents need flexibility to determine the scope of an audit and need the ability to expand the examination time when necessary,” Kelley said. “The men and women of the IRS who perform these audits are highly-experienced employees who know which issues to examine and when more time is necessary on a case. But under current IRS policies, this is just not the case.”

Hindering these employees in any way, Kelley added, “is fundamentally unfair” to the millions of taxpayers who dutifully pay their taxes.

The NTEU president repeated her call for a 2 percent annual net increase in IRS staffing over the next five years, a move which would add roughly 1,885 positions per year. Because of the potential for a significant return to the Treasury from such action, consideration should be given to increasing hiring outside of the ordinary budget process, she said.

Alternatively, Kelley suggested that funding for additional staffing could come from allowing the IRS to retain a small portion of the revenue it collects; she contrasted the benefits to the agency and the nation of doing that with the cost of hiring private sector debt collectors. Under the IRS privatization program, such companies are allowed to retain up to 25 percent of the money they collect.

NTEU is the largest independent federal union, representing some 150,000 employees in 30 agencies and departments, including 94,000 in the IRS.