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Washington, D.C.—The great progress of the past two years in modernizing the Internal Revenue Service (IRS) is “at risk” unless the Bush administration and Congress “make a commitment to more funding” for this crucial agency, the leader of the union representing IRS employees said today.

President Colleen M. Kelley of the National Treasury Employees Union (NTEU) told the nine-member IRS Oversight Board—a public-private body charged under the law with overseeing critical aspects of the IRS, including long-term planning—that “without a commitment to provide adequate funding, the IRS will be forced to shuffle resources from one account to another, with the end result being a less responsive IRS.”

She added that while IRS employees have made “tremendous progress” in

responding to the mandates of the 1998 IRS Restructuring and Reform Act (RRA), “the current IRS workforce can only do so much with limited resources.”

Kelley offered her testimony at a meeting of the Oversight Board, which was created by RRA. The session dealt with the Board’s strategic plan and fiscal 2002 budget recommendation for the agency. If fully funded, she said, the plan and budget “would ensure that the IRS would succeed in meeting its modernization goals in a timely manner.”

She said that while full details of the administration’s budget proposals have yet to be made public, based on what is already known, NTEU believes that “the Bush budget fails to provide funding to account for inflation and routine pay increases for the IRS to maintain its current workforce”—as a result of which it will be forced to cut back on its plans to hire additional employees.

Further, she said, while the president’s budget likely will provide $400 million to modernize the agency’s outdated computer systems, this is “less than half” the Oversight Board’s recommendation of $1 billion for systems modernization. She added that while NTEU “supports an increased budget for more advanced information technology systems and better equipment, we do not believe that these improvements have to come at the expense of reduced funding for staffing.”

The NTEU president also encouraged Oversight Board support for repeal of Section 1203(b) of RRA, which mandates termination of IRS employment for violation of any one of ten specified offenses. The section is “having a negative effect on collections and morale at the IRS,” she said, “and it must be repealed or modified.”

Among the Board members are Treasury Secretary Paul O’Neill and IRS Commissioner Charles O. Rossotti. Also on the Board, representing employees, is Robert Tobias, Kelley’s predecessor as NTEU president.

NTEU is the largest independent federal union, representing some 150,000 employees in 25 agencies and departments, including 98,000 in the IRS. Its members have played key roles in IRS modernization from the beginning of the long-term project.