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Washington, D.C.—As a key Senate subcommittee holds hearings on the nation’s burgeoning tax gap, the leader of the union representing Internal Revenue Service (IRS) employees, in a White Paper released today, said there is no mystery about the single most important step that should be taken to reduce the gap between taxes owed and tax paid.

That step, said President Colleen M. Kelley of the National Treasury Employees Union (NTEU) is the hiring of sufficient staff by the IRS to meet both its tax law enforcement and customer service responsibilities.

“The fact is that the IRS has neither sought nor fought for the resources it needs to address in a meaningful manner our nation’s tax gap,” President Kelley said. The IRS itself puts the tax gap at some $345 billion annually; the agency’s National Taxpayer Advocate has called that an effective surtax of some $2,000 each year on taxpayers who meet their tax obligations.

In a document provided to members of the Senate Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management, the NTEU president said figures from the IRS’s own annual reports and similar documents tell the 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 time, the total number of IRS employees declined from 114,000 to 94,000.

“Even more alarming,” Kelley said, “is that during that period, the number of Revenue Officers and Revenue Agents—two groups of IRS employees critical to reducing the tax gap—shrunk by 40 percent and 30 percent, respectively.” The number of Revenue Officers declined from 8,139 to 5,004; the number of Revenue Agents fell from 16,078 to 11,513.

“You can stretch a workforce only so far,” Kelley said. “The IRS and this administration simply have to respond to the crisis caused by a dramatically decreased workforce facing a dramatically increased workload.”

Clearly, however, that is not being done. For one thing, Kelley said, the requested IRS budget for fiscal 2007 reflects a miniscule increase of about 1.5 percent—and only slightly higher, about two percent, for tax law enforcement, and that increase is predicated on unspecified cuts to other IRS programs.

For another, the agency is moving to cut its staff of gift and estate tax attorneys by half, a move Kelley has described as both short-sighted and ill-conceived. The IRS has said that these attorneys bring in more dollars per audit than other agency employees because they review the returns of wealthier taxpayers.

It is not uncommon, she said, for these tax attorneys to find errors in returns that can bring in thousands of dollars to the Treasury quickly. NTEU is strongly opposed to the reduction of the estate and gift tax attorney workforce, as are some members of Congress.

At the same time, the agency is moving ahead with its program of hiring private sector debt collectors to pursue tax debts in exchange for a bounty of up to 24 percent of the money they collect—despite the admission by IRS Commissioner Mark Everson that agency employees could perform the work at less cost.

The IRS, Kelley said, points to a taxpayer noncompliance rate of 16.3 percent, including the non-filing of tax returns, underreporting tax liabilities and underpayment of taxes due. “If the IRS were serious about reducing this tax gap,” she said, “it would be asking for the personnel to attack it.”

In addition to asking Congress for more people to bring staffing up to the 1996 level, and to provide a dedicated funding stream if necessary, the IRS needs to move experienced staff from areas of less need—like paper tax return processing—to Automated Collection Systems (ACS) work.

“The idea of more staff to handle increasing work at the IRS is not new,” President Kelley said, noting that the independent IRS Oversight Board, among other bodies, has been recommending such a move for several years. “It is, however, an idea that needs to gain currency and favor with the IRS and the administration, if there is any real desire to close the tax gap in a meaningful way,” she added.

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