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October 1, 2019
Internal Revenue Service Appropriations, FY2020
Overview
enforcement program.” According to IRS budget
The Internal Revenue Service (IRS) has two primary
documents, these investments would result in an estimated
statutory responsibilities: (1) to collect most of the revenue
gross revenue gain of $47.1 billion over 10 years, at a total
required to fund the federal government and a variety of
cost of $14.5 billion, yielding a net revenue gain of $32.6
discretionary programs, and (2) to enforce taxpayer
billion. This estimate does reflect the revenue effects of
compliance with federal tax laws and regulations. In
added enforcement initiatives on taxpayer noncompliance.
FY2018, the agency processed 250.3 million tax and
information returns (not including Form 1099 returns) and
Table 1. IRS’s FY2019 and FY2020 Appropriations,
collected $3.5 trillion in gross revenue.
Excluding Nonappropriated Funds
(millions of dol ars)
Appropriations provide the vast share of operating funds for
the IRS. In FY2018, 93% ($11.4 billion) of its budget came
FY2020
from appropriations. The remaining 7% ($850 million)
FY2019
FY2020
H.R.
FY2020
stemmed from several sources, over which the IRS has
Account
Enacted
Request
3351a
S. 2524b
unlimited authority regarding the use of the funds:
reimbursements from other government agencies for
Taxpayer
$2,492
$2,402
$2,559
$2,482
services rendered by the IRS, offsetting collections, user
Services
fees, and carryovers of unobligated balances from previous
Enforcement
4,860
4,705c
4,957d
5,060
years.
Operations
3,724
4,075e
3,794f
3,722
Historically, IRS’s appropriated funds have been distributed
Support
among four accounts: taxpayer services (TS), enforcement,
Business
150
290
290
150
operations support (OS), and business systems
Systems
modernization (BSM). As Table 1 shows, enforcement
Modernization
represented 43% of the $11.303 billion in enacted
appropriations for FY2019, followed by OS (33%), TS
Administrative
77
—
—
—
(22%), and BSM (1%). Congress included another $77
Provision
million in FY2019 to allow the IRS to continue
Total
$11,303 $11,472
$12,000
$11,414
implementing the many changes to the federal tax code
made in 2017 by P.L. 115-97.
Sources: IRS’s FY2020 Budget Justification and House
Appropriations Committee report on H.R. 3351 (H.Rept. 116-122)
The Trump Administration is asking for $11.472 billion in
and Senate Appropriations Committee report on S. 2524 (S.Rept.
appropriations for the IRS in FY2020, or $169 million more
116-111).
than the enacted amount for FY2019. This increase is the
a. As passed by the House.
net result of cost savings from several efficiency measures
b. As reported by the Senate Appropriations Committee.
and the discontinuation of the $77 million in funding for
c. Excludes Program Integrity Cap increase of $199.9 mil ion.
implementing the provisions of P.L. 115-97, and added
d. Excludes Program Integrity Cap increase of $200 mil ion.
spending of $180 million for the BSM program, $34 million
e. Excludes Program Integrity Cap increase of $162 mil ion.
for enhanced data analytics, $22.5 million for identity theft
f.
Excludes Program Integrity Cap increase of $200 mil ion.
prevention, and $107 million for cybersecurity
enhancement and maintaining and upgrading IRS’s
Individual Appropriations Accounts
information systems.
Taxpayer Services
In addition, the Administration is proposing additional
The Administration’s FY2020 budget request includes
funding in FY2020 for enforcement activities ($200
$2.402 billion for TS. Of the requested amount, $8.9
million) and operations support ($162 million) through a
million would be set aside for the Tax Counseling for the
program integrity cap adjustment under Section 251(b)(2)
Elderly Program (TCEP), $12.0 million for low-income
of the Balanced Budget and Emergency Deficit Control Act
taxpayer clinic grants, $15.0 million for matching grants
of 1985 (BBEDCA; P.L. 99-177). Congress would have to
under the Community Volunteer Income Tax Assistance
approve the adjustments before the associated funds could
(VITA) program (available until September 30, 2021), and
be spent. The added funds, along with proposed cap
$206 million for the Taxpayer Advocate Service (TAS),
adjustments in future years, would be used to pay for
“continuing investments in expanding and improving the
with $5 million designated for cases involving taxpayer
identity theft.
effectiveness and efficiency of the IRS’s overall tax
https://crsreports.congress.gov
Internal Revenue Service Appropriations, FY2020
Under H.R. 3351, as passed by the House, the IRS would
funding via OS to address the federal tax gap through a
receive $2.559 billion in appropriations for TS in FY2020,
program integrity cap increase.
or $157 million more than the budget request. Of the
recommended amount, $12 million would go to the TCEP,
S. 2524 recommends $3.722 billion in appropriations for
$13 million to low-income taxpayer clinic grants, $25.0
OS in FY2020, or $515 million less than the budget request
million to VITA matching grants (available until September
(including the proposed program integrity cap increase).
30, 2021), and $210 million for TAS, with $1 million
designated for cases involving identity theft and returns
Business Systems Modernization
filed by deceased children.
Under the Administration’s budget request, the BSM
program would receive $290 million in appropriations for
S. 2524, as reported, would give the IRS $2.482 billion in
FY2020, or $140 million more than the enacted amount for
appropriations for TS in FY2020, or $79 million more than
FY2019. The requested funds would be available for
the budget request. Of the recommended amount, $9.9
obligation through the end of FY2022.
million would be set aside for the TCEP, $12 million for
low-income taxpayer clinic grants, $25 million for VITA
H.R. 3351 also recommends that the IRS receive $290
matching grants (available until September 30, 2021), and
million in appropriations for BSM in FY2020.
$207 million for TAS.
S. 2524 would limit appropriations for BSM in FY2020 to
Enforcement
the same amount that was enacted in FY2019: $150 million.
Under the Administration’s budget request, the IRS would
receive $4.705 billion in appropriations for enforcement
Administrative Provisions
activities in FY2020, or $155 million less than the enacted
The budget request and the House and Senate FY2020
amount for FY2019. Of that amount, $60.3 million would
appropriations bills for the IRS contain a number of
be set aside for the Interagency Crime and Drug
administrative provisions (or policy riders) that provide
Enforcement program. Another $200 million for reducing
additional guidance to the agency on how it should use its
the federal tax gap would come from a requested program
appropriated funds. Most of these provisions do not change
integrity cap increase under the BBEDCA in FY2020.
from year to year and appear to enjoy bipartisan backing.
They address issues such as training programs for IRS
H.R. 3351 would give the IRS $4.957 billion in
employees on taxpayer rights; the protection of taxpayer
appropriations for enforcement in FY2020, or $252 million
information; improving toll-free phone service for
more than the budget request. Of that amount, $60.3 million
taxpayers; awarding employee bonuses; and targeting
would go to the Interagency Crime and Drug Enforcement
individuals because of their ideological beliefs.
program. It also includes another $200 million for reducing
the federal tax gap, as a program integrity cap increase. The
The budget request includes three new provisions. Two of
gap refers to the difference between the total income,
them (§§108 and 109) would restore “streamlined critical
employment, excise, gift, and estate taxes owed in a year
pay authority” for the IRS through the end of FY2023. This
and the total amount of those taxes paid in full and on time.
authority, which lapsed in 2013, would enable the IRS to
According to the latest estimate from the IRS, the gross
hire up to 40 persons with needed information technology
federal tax gap averaged $441 billion per year from 2011 to
skills for up to four years at a pay rate in excess of the
2013; late payments and IRS enforcement actions lowered
federal General Schedule pay scale for career employees. A
the gap to an annual average of $381 billion.
third provision (§110) would allow the IRS to reallocate up
to $10 million in appropriations to meet changing priorities,
S. 2524 would provide the IRS with $5.060 billion in
without prior congressional approval.
appropriations for enforcement activities in FY2020, or
$155 million more than the budget request (including the
Section 111 of H.R. 3351 would restore critical pay
proposed program integrity cap increase). Of the
authority to the IRS through the end of FY2023.
recommended funding, $635 million would be designated
for the IRS’s Criminal Investigation Division. The bill does
S. 2524 contains no new provisions affecting the IRS, but
not call for a program integrity cap increase.
Section 111 would prohibit the IRS from using appropriated
funds to create prefilled (or prepopulated) tax returns for
Operations Support
individuals with relatively uncomplicated tax situations.
The Administration is asking for $4.075 billion in
H.R. 3351 and the budget request do not contain a similar
appropriations for OS in FY2020, or $351 million more
provision. A key issue behind the ban is the ability of the
than the enacted amount for FY2019. Of the requested
IRS to provide free direct online tax filing that does not
amount, $250 million would be available for use through
conflict with the agency’s ongoing Free File program.
the end of FY2021. The budget request also calls for a
There is disagreement among Members of Congress over
program integrity cap increase of $162 million to address
whether or not to permanently extend the program and its
the federal tax gap through the OS account
prohibition on the IRS offering prepopulated returns and
free direct online filing to all taxpayers.
H.R. 3351 would provide $3.794 billion in appropriations
for OS in FY2020, or $281 million less than the budget
Gary Guenther, Analyst in Public Finance
request. It would also give the IRS another $200 million in
IF11323
https://crsreports.congress.gov
Internal Revenue Service Appropriations, FY2020
Disclaimer
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https://crsreports.congress.gov | IF11323 · VERSION 1 · NEW