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Washington, D.C.—A report from Syracuse University showing a serious slide in tax enforcement activities by the Internal Revenue Service sharply underscores the need for a substantial increase in agency funding as called for by the public-private IRS Oversight Board, the leader of the union representing IRS employees said today.

The presidentially-appointed Oversight Board called for additional resources to aid the IRS in bolstering its tax law enforcement and collection efforts. It recommended a 10 percent increase in the agency’s budget, to $11.2 billion, to help pay for such activities as performing additional audits, closing more cases involving high-income taxpayers and tax shelter promoters, and expanding contacts with taxpayers who either fail to file a return or do not pay the taxes due.

“Everyone sees the problems with IRS’s enforcement activities,” said President Colleen M. Kelley of the National Treasury Employees Union (NTEU). “It is clear that the IRS needs additional staff, and that a relatively small investment in IRS funding would significantly increase tax revenues and strengthen our voluntary tax system. But the administration consistently opposes adequate increases in IRS resources,” she added.

The Transactional Records Access Clearinghouse (TRAC) at Syracuse University, which annually reports on IRS activities, joined the Oversight Board and the Treasury Department Inspector General for Tax Administration (TIGTA) in criticizing IRS enforcement efforts. TIGTA recently said the IRS is routinely allowing convicted tax criminals to evade paying the taxes, penalties and interest that are part of their criminal sentences.

Among other findings, the TRAC report highlighted a decline in audits of business tax returns; a reduction in the audit rate of corporations with assets of at least $250 million; and a decline in civil negligence and civil fraud penalties, as well as in prosecutions for tax law infractions.

Despite all this, President Kelley said the agency is continuing its efforts to secure congressional approval for an ill-advised program of privatizing tax debt collection and is moving forward with a series of reduction-in-force (RIF) notices affecting some 5,000 IRS employees in various functions around the country.

“Both of these steps are bad ideas,” Kelley said. “None of the plans to eliminate employees, including the centralization of two key functions currently performed in 92 locations across the country into only four, is supported by a solid business case—and tax debt privatization was tried, with disastrous results, eight years ago.”

The tax debt privatization proposal, which is attached to a corporate tax bill (S. 1637) to be taken up by the Senate on the return of Congress from its spring recess, would put at serious risk

sensitive taxpayer information by making it available to private sector debt collectors. A poll last summer showed that Americans, by a majority reaching 80 percent—depending on how much detail was provided—oppose turning their tax information over to private sector debt collectors.

What’s more, President Kelley said, privatizing the function is far less cost-effective than investing in IRS tax collection efforts. An IRS study itself showed that with only a modest investment in resources, agency employees could generate 10 times the return from using private contractors.

This would result in a return of $30 for every dollar invested in IRS employees, compared with a return only $3 for every dollar paid to debt collection agencies. Under the proposal, the private firms would be paid a bounty of up to 25 percent of the amounts they collect.

In its determination to move ahead with this dubious and costly privatization program, President Kelley said, “it looks like the IRS, in order to bolster its case for turning tax collection efforts over to the private sector, is not assigning workers to go after even the easiest-to-collect tax debt.”

NTEU is the largest independent federal union, representing some 150,000 employees in 29 agencies and departments, including some 98,000 in the IRS.