Tax News

CCH (cch.taxgroup.com) reports:

The Financial Services and General Government Subcommittee of the Senate Appropriations Committee on July 10 approved a 2008 fiscal year (FY) IRS budget of $11.1 billion and, in a much more controversial move, voted to limit future funding for the Service's private debt collection initiative, effectively terminating it. The full Appropriations Committee is expected to take up the bill, the 2008 Financial Services and General Government Appropriations Bill, on July 12.
Treasury/IRS
Overall, the subcommittee appropriated $12.2 billion for the Treasury Department's FY 2008 budget, which includes $11.1 billion for the IRS. The subcommittee approved an increase of $112.5 million more than the White House requested for FY 2008. More than $6 billion would go for IRS enforcement, $2.1 billion for taxpayer services and $282 million for modernization of the Service's business and computer systems.
The $2.1 billion for taxpayer services represents $45.1 million more than the Administration's request. "Shortchanging resources available for taxpayer services sends the wrong signal and is inconsistent with the equation at the centerpiece of the IRS' strategic plan: Service + Enforcement = Compliance," Sen. Richard Durbin, D-Ill., said in a statement.
The Treasury Department and IRS funding provisions are part of a much larger spending bill. The bill funds the Office of the Vice President, the federal courts, the District of Columbia, and many federal agencies.
Private Tax Collection
Durbin was one of the chief architects of the anti-privatization language in the bill. The IRS would be allowed to continue the initiative but new funding would be capped at $1 million. Supporters of private tax collection have said in the past that $1 million would be inadequate to maintain the program. A similar proposal to limit future funding for the privatization program to $1 million failed in the House (TAXDAY, 2007/06/29, C.1).
Currently, two private collection agencies are working taxpayer accounts for the IRS. The IRS intends to expand the initiative in 2008 unless Congress restricts or cuts off funding.
CCH Comment. The Financial Services and General Government Subcommittee is a new committee in the 110th Congress. Durbin is chair and Sen. Sam Brownback, R-Kan., is the ranking member. The subcommittee oversees funding for the Treasury Department and the IRS.
By George L. Yaksick, Jr., CCH News Staff