IRS cuts could have affected tax practice.

• Author: Stromsem, William R.

Last-Minute Appropriations Agreement Saves IRS and Practitioners

In the last few days before the start of the October 1 fiscal year, Congress relented on its proposed IRS budget cuts and funded the Service at a reduced (but probably adequate) level. This was surprising, as both houses of Congress had separately proposed more severe spending cuts than were finally agreed upon. The House had propose $6,679 million and the Senate $6,880 million, the final appropriation was $7,043 million, down from the $7,348 million appropriated last year.

This $305 million cut, while less severe than it might have been, is still a significant reduction. Appropriations are in real dollars, and if we assume a 4% inflation rate, the actual effect in terms of required program reductions is nearly $600 million. The Administration had asked for $7,995 million to cover Federal pay raises and other required cost increases, and to fund important program. A major portion of the cuts is in the Tax Systems Modernization (TSM) area, but other areas will also be

Editor's note: This department is written by the AICPA Tax Division's professional staff. It is designed to heighten awareness of the Divisions work and keep readers apprised of Tax Division activities involving tax policy, technical issues and other practice support matters.

Mr. Stromsem's views, as expressed in this column, do not necessarily reflect the views of the AICPA. Official positions are determined through certain specific committee procedures, due process and deliberation. trimmed back, hopefully in a way that will not affect service to taxpayers and their representatives too severely.

Facing real cuts in some IRS programs and service, and having barely avoided much more extreme cuts, practitioners should be aware of the extent to which their interests are directly tied to the Services budget. They need to be concerned about the effect of IRS bashing coming from all segments of the population and from both political parties. They should support efforts to deal with the root problems that engender this hostility towards the IRS. Note: This column was prepared in anticipation of the more drastic cuts proposed by the House and Senate; it was intended to inform practitioners and prepare them for lower levels of service as they worked with the IRS. While the effects of the cuts will not be as severe as portrayed in the column, there will be some current reductions in service. And continued budget cuts could...