TEI Testimony on the Internal Revenue Service's budget for FY 2005.

• Position: Tax Executives Institute

March 30, 2004

On March 30, 2004, Tax Executives Institute testified before the Subcommittee on Oversight of the House Committee on Ways and Means on the Internal Revenue Service's budget for the fiscal year beginning October 1, 2005. TEI Executive Director Timothy J. McCormally presented the Institute's testimony.

Good afternoon. I am Executive Director of Tax Executives Institute, the preeminent association of business tax professionals. The Institute is pleased to participate in today's hearing on the tax filing season and the Internal Revenue Service's budget.

Background

Tax Executives Institute was established in 1944 to serve the professional needs of in-house tax practitioners. Today, the Institute has 53 chapters in the United States, Canada, and Europe. Our 5,400 members are accountants, attorneys, and other business professionals who work for 2,800 of the leading companies in North America and Europe; they are responsible for conducting the tax affairs of their companies and ensuring their compliance with the tax laws. Hence, TEI represents the business community as a whole, and our members deal with the tax code in all its complexity, as well as with the Internal Revenue Service, on almost a daily basis. TEI is dedicated to the development and effective implementation of sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike.

The companies that employ TEI's members have almost without exception been assigned to the IRS's Large and Mid-Size Business (LMSB) Division. The largest 1,600 taxpayers within LMSB are part of the Coordinated Industry Cases (CIC) program; this means that they are subject to heightened scrutiny and, indeed, continual audit by the IRS. As non-participants in the so-called audit lottery, TEI members and the companies they represent have a keen interest in ensuring the efficient operation of the IRS and the proper balance of the agency's taxpayer service, enforcement, and other activities. Specifically, TEI has long supported adequate funding for the IRS, particularly in respect of training and technology, and collaborative efforts between taxpayers and the IRS. We are pleased to offer our views on the IRS's budget for fiscal year 2005.

Increased Demand, Decreased Resources

The Bush Administration has proposed a budget for the IRS for fiscal year 2005 of $10.674 billion, a 4.8 percent increase from 2004. The proposal would increase funding for the agency's enforcement program by $366 million while decreasing funds for business systems modernization by $105 million. According to the Administration, the reduction in funding for the...