Dear Chairman Durbin and Ranking Member Moran:
On behalf of the National Association of Enrolled Agents (NAEA), which represents the interests of 43,000 enrolled agents, I write to urge your subcommittee to fully appropriate the Administration’s FY 2013 budget request of $12.76 billion for the Internal Revenue Service (IRS). As America’s tax experts, enrolled agents represent millions of individual and small business taxpayers, and are tested and licensed to practice by the IRS. NAEA is dedicated to helping enrolled agents maintain the highest level of knowledge, skills and professionalism in all areas of taxation, so that they may most effectively represent the needs of their clients.
As a profession we provide consultation, preparation, and advocacy services to America’s taxpayers. We often find ourselves sitting across the table from the Service, in some cases seriously disagreeing with the IRS’ position on a particular tax issue, but in all cases attempting to work with the Service to reach an equitable resolution. More often, though, we find ourselves on the telephone or by old fashioned “snail mail,” assisting taxpayers in correspondence audits or in filing past year returns or in negotiating agreements on balances due.
In the interest of enrolled agents and their clients, the taxpaying public, we firmly believe the IRS requires adequate levels of funding in order to carry out its tax administration duties: namely, to inform, educate, and assist those taxpayers who attempt to comply voluntarily with the tax laws, and to compel compliance from those who fail to file returns, report income accurately, and pay their tax obligations.
We are not alone in our belief, as the IRS National Taxpayer Advocate, Nina Olson, in her 2011 Annual Report to Congress, asserted the most serious tax problem encountered by taxpayers is that IRS is not adequately funded to serve taxpayers and collect taxes. In her thorough and thoughtful assessment, she explains:
The workload of the IRS has expanded substantially in recent years due to a variety of factors, including the increasing complexity of the tax code and its frequent changes, the service needs of an increasingly diverse taxpayer population, a surge in refund fraud and tax-related identity theft, and the need to implement new third-party information reporting requirements. However, the IRS has not received sufficient resources to manage its expanding workload; in fact, the IRS budget was reduced slightly from fiscal year (FY) 2010 to FY 2011, and it has been cut by an additional 2.5 percent in FY 2012.
The Administration’s requested FY 2013 budget of $12.76 billion is $944.5 million more than the FY 2012 budget as enacted, which includes $200.5 million to restore FY2012 reductions to enforcement programs and $275.1 million to implement information technology and operational infrastructure. These increases are critically important for the Service to be able to fulfill its duties as our tax administrator, especially considering its workloads and responsibilities continue expanding through an increasingly complex tax code.
We are concerned, however, with the level of funding for taxpayer assistance and specifically note that the proposed target FY 2013 customer service representative level of service is 63.0 percent, which is a slight improvement over a level of service that in our experience is inadequate. Returning to Ms. Olson’s report in which she drives home the importance of taxpayer service in the following fashion:
Two key measures of taxpayer assistance are the IRS’s ability to answer taxpayer telephone calls and its ability to respond to taxpayer correspondence. From FY 2004 to FY 2011, the percentage of calls the IRS answered from taxpayers seeking to speak with a telephone assistor dropped from 87 percent to 70 percent. Over the same period, the IRS’s ability to process taxpayer correspondence in a timely manner also declined. … [T]he IRS is now unable to answer three out of every ten calls it receives, and nearly half of all taxpayers who write to the IRS must wait more than 6 1/2 weeks for a reply.
When taxpayers and taxpayer representatives, such as enrolled agents, cannot reach trained, competent IRS staff in a timely fashion, everyone loses. Compliance costs increase for those taxpayers who run the taxpayer assistance gauntlet, compliance rates suffer because people stop trying, and trust in the efficiency and fairness of the tax administration system erodes.
Equally important, the IRS needs proper funding to continue modernizing its antiquated computer systems. Until the IRS computer systems are modernized the IRS simply cannot provide the type of service Americans expect in the 21st century from a large financial services organization. Continued investments in modernized computer systems will provide all IRS workers with the taxpayer data they need when they need it to inform their interactions with taxpayers and their representatives.
We appreciate that coming to IRS’ budget defense in any environment, far from the current spending environment, is challenging. The fact remains that IRS interacts with more citizens than any other agency of the government, and America’s unique system of self-assessment requires a tax administrator that is capable of providing timely, complete, and accurate responses to taxpayer queries, whether in response to taxpayer instigated pre-filing questions or IRS-prompted post-filing actions. IRS cannot provide the requisite numbers of trained personnel without appropriate budgets. See-sawing budgets, rising and falling year after year, makes it difficult for IRS to hire, train and retain the best workforce for the American taxpayer.
On behalf of enrolled agents, America’s tax experts, and on behalf of the millions of taxpayers we represent, we ask that, in your deliberations consider the unique duties the IRS must fulfill, and at the very least fully fund the Administration’s FY2013 IRS budget request.
Thank you for your positive consideration of our request.