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Washington D.C. — The leader of the union representing ten of thousands of Internal Revenue Service (IRS) employees challenged the aggressiveness of agency efforts to close the nation’s $345 billion tax gap and increase compliance as outlined by the Treasury Secretary and IRS commissioner at a Senate hearing yesterday.

“The IRS could shrink the tax gap exponentially by hiring and training additional service and enforcement staff, yet it has repeatedly failed to ask Congress for the necessary resources,” President Colleen M. Kelley of the National Treasury Employees Union (NTEU) said following testimony given by the Treasury Secretary Henry M. Paulson Jr. and IRS Commissioner Mark W. Everson before the Senate Finance Committee.

The NTEU leader took exception to Secretary Paulson’s statements that the IRS is hiring as many Revenue Agents as it can and that IRS budget requests have not been met by Congress. The IRS budget request for FY 2007 was $10.592 billion. Congress funded the agency at $10.597 billion for FY 2007, but the agency will see declining enforcement personnel under this budget.

The IRS has requested a total budget of $11.095 billion for fiscal year 2008, which would add personnel, but will not add any enforcement personnel in ’07. In fact, enforcement levels will drop by several hundred, the NTEU president said.

The idea that the small increases envisioned by the 2008 budget are all the agency can handle are disingenuous, said Kelley. IRS has said that it must take one current staffer offline to train every three new staffers, which clearly is not necessary, the NTEU leader noted.

NTEU leadership has repeatedly urged that the single most important step that the agency could take to reduce the tax gap—the amount of taxes owed to the IRS and the amount of taxes received—is to request adequate funding and hire sufficient staff to meet both its tax law enforcement and customer service responsibilities. Enforcement staffing at the IRS is down significantly when compared with levels in the mid-1990s.

The IRS should ask Congress to fund a two percent annual net increase in IRS staffing over the next five years, a move which would add roughly 1,885 positions per year, to return the IRS to 1998 levels, Kelley said, adding, “If the IRS were serious about reducing the tax gap, it would be asking for the personnel and budget to attack it.”

Figures from the IRS also tell a compelling personnel story. In 1995, some 114.6 million tax returns were filed, a number that grew to 130.3 million by 2003. Yet, over that same period, the total number of IRS employees declined from 114,000 to 94,000. During that same time period, the number of Revenue Officers and Revenue Agents—two groups of IRS employees most critical to reducing the tax gap—shrunk by 32 percent and 23 percent, respectively. The number of Revenue Officers fell from 8,139 to 5,462, while the number of Revenue Agents fell from 16,078 to 12,355.

During fiscal year 2006, IRS employees collected more than $2.2 trillion in taxes and processed over 228 million tax returns.

NTEU is the largest independent federal union, representing some 150,000 employees in 31 agencies and departments, including 94,000 in the IRS.