Internal Revenue Service Budget, FY2017
Updated June 16, 2017
Internal Revenue Service Budget, FY2017
Overview
On July 7, 2016, the House approved a bill (H.R. 5485) that
The Internal Revenue Service (IRS) collects most of the
would have given the IRS $10.999 billion in appropriations
revenue needed to fund the federal government and
for FY2017, or $236 million less than the amount enacted
enforces federal tax laws. In FY2016, the IRS processed
for FY2016 and $1.281 billion less than the
244.2 million tax returns and other forms and collected $3.3
Administration’s budget request.
trillion in gross taxes.
On June 16, 2016, the Senate Appropriations Committee
Appropriated funds accounted for nearly 93% of the funds
reported a measure (S. 3067) that would have given the IRS
available to the IRS for obligation in FY2015, the most
$11.235 billion in appropriations for FY2017, or the same
recent year for which actual figures are available. The
amount that was enacted for FY2016 and $1.045 billion less
remainder consisted of reimbursements, offsetting
than the budget request.
collections, user fees, and unobligated balances from
previous years. Historically, the agency’s appropriations
After being funded through two continuing resolutions
have been distributed among four accounts: taxpayer
during the first seven months of FY2017, the IRS received
services, enforcement, operations support, and business
a final budget for the year when President Trump signed the
systems modernization (BSM). In FY2015, enforcement
Consolidated Appropriations Act, 2017 (P.L. 115-31) on
received about 45% of the $10.650 billion in IRS
May 5, 2017. The act provides the IRS with the same
appropriations, followed by operations support (34%),
amount of appropriations in FY2017 that it received in
taxpayer services (20%), and the BSM program (10%).
FY2016: $11.235 billion.
Table 1. FY2017 Budget Request and FY2016
It should be noted that the IRS has unrestricted access to
Appropriations
additional funds for its operating expenses. They fall
(millions of dollars)
outside the appropriations process and stem from a variety
of sources, including reimbursable expenses, user fees,
FY2016
FY2017
FY2017
offsetting collections, and unobligated balances from
Enacted
Request
Enacted
previous years. IRS’s miscellaneous resources totaled an
estimated $1.139 billion in FY2016 and are expected to
Taxpayer
$2,156
$2,406
$2,157
decrease to $947 million in FY2017.
Services
Individual Accounts
Enforcement
4,860
5,216
4,860
Operations
3,638
4,314
3,638
Taxpayer Services
Support
Funding for taxpayer services pays for the costs associated
Business
290
343
290
with helping taxpayers meet their tax obligations, producing
Systems
tax forms and publications, processing tax returns and other
Modernization
documents, and providing taxpayer advocacy services.
Administrative
290
—
290
The IRS’s FY2017 budget request allocated $2.406 billion
Provision
to taxpayer services, or $73 million more than the total
Total
$11,235
$12,280
$11,235
amount appropriated for FY2016. This difference included
the $177 million that was transferred to the taxpayer
Source: IRS FY2017 Budget Justification, House Report on H.R.
services account in FY2016 from the $290 million provided
5485, Senate Report on S. 3067, and P.L. 115-31.
in Section 113 of the administrative provisions for the IRS
in P.L. 114-113. The Obama Administration said the added
The Obama Administration requested $12.280 billion in
funds would be used to improve taxpayer services.
appropriations for the IRS in FY2017, or 9.3% more than
the amount enacted for FY2016. According to the
Under H.R. 5485, as passed by the House, the IRS would
Administration’s justification for the budget request, the
have received $2.156 billion for taxpayer services in
added funding was to be used to maintain FY2016
FY2017, or the same as the amount enacted for FY2016 but
operating levels, improve taxpayer services, develop more
$250 million less than the budget request.
effective methods of boosting taxpayer compliance, make
IRS operations more efficient, and expand programs to
In its report on S. 3067, the Senate Appropriations
prevent identity theft and related tax fraud.
Committee also recommended that the IRS receive $2.156
billion for taxpayer services in FY2017.
https://crsreports.congress.gov
Internal Revenue Service Budget, FY2017
P.L. 115-31 gives the IRS $2.156 billion for taxpayer
Under P.L. 115-31, the IRS is receiving $3.638 billion for
services in FY2017. Of that amount, $8.9 million is
operations support, of which $50 million will be available
reserved for the Tax Counseling for the Elderly Program,
for obligation through the end of FY2018.
$12 million for low-income taxpayer clinic grants, and $15
million for matching grants under the Volunteer
Business Systems Modernization
Community Tax Assistance Program.
The BSM program began in 1998 and is intended to
upgrade critical information systems, such as automated
Enforcement
taxpayer accounts. Funding for the program covers
Funding for enforcement enables the IRS to undertake a
expenses related to project planning and the acquisition of
variety of activities aimed at ensuring that taxpayers meet
information technology developed for the program.
their tax obligations in a timely manner. These activities
include the examination of U.S. and foreign tax returns, the
In its budget request for the IRS, the Administration sought
collection of overdue taxes, the investigation of criminal
$343 million in appropriations for BSM, or $53 million
violations of the federal tax code, and the settlement
more than the amount enacted for FY2016.
through judicial or administrative proceedings of taxpayer
appeals of examination findings.
Both H.R. 5485 (as passed by the House) and S. 3067 (as
reported) would have provided $290 million in
Under the Administration’s budget request for FY2017, the
appropriations for BSM in FY2017, or the same amount
IRS was to receive $5.216 billion in appropriations for
that was enacted for FY2016 but $53 million less than the
enforcement activities, or $356 million more than the
budget request.
amount enacted for FY2016. The requested amount
included a program integrity cap adjustment of $231
P.L. 115-31 endorses the amount recommended by H.R.
million under the Budget Control Act of 2011 (P.L. 112-
5485 and S. 3067.
25).
Other Issues
H.R. 5485, as passed by the House, would have given the
IRS $4.760 billion for enforcement activities, or $100
Administrative Provisions
million less than the amount enacted for FY2016 and $556
P.L. 115-31 includes several administrative provisions that
million less than the budget request. None of the funds
apply only to the IRS. The notable ones are listed below:
could be used to implement the Affordable Care Act (ACA,
P.L. 111-148).
Section 104 ensures that enough funds are available to
provide adequate toll-free telephone assistance for
As reported, S. 3067 would have provided $4.860 billion in
taxpayers, especially victims of identity theft.
appropriations for enforcement, or the same amount that
was enacted for FY2016 and $356 million less than the
Sections 107 and 108 prohibit the IRS from using funds
budget request.
to target certain groups for added regulatory scrutiny
because of their “ideological belief,” or individuals for
P.L. 115-31 provides $4.860 billion for enforcement with
exercising their First amendment rights and freedoms.
no program integrity budget cap adjustment.
Section 110 requires the IRS, before awarding a bonus
Operations Support
to a current employee or hiring a former employee, to
Funding for operations support covers expenses for overall
take into consideration that person’s performance as an
planning and direction, shared services and support for
IRS employee and compliance with tax laws.
facilities, rent, printing, postage, security, and the
maintenance, upgrade, and security of agency
Section 112 bars the IRS from using any funds to
telecommunications and information systems.
develop a return-free tax filing system.
The Obama Administration asked Congress for $4.314
Section 113 gives the IRS an additional $290 million in
billion in appropriations for operations support in FY2017,
FY2017 to implement “measureable improvements” in
or $567 million more than the total amount enacted for
the level of customer service, the detection and
FY2016. The requested amount included a program
prevention of identity theft and related refund fraud, and
integrity cap adjustment of $283 million.
the security of the agency’s information systems.
H.R. 5485, as passed by the House, would have provided
Section 126 prohibits the IRS from using any funds to
the IRS with $3.502 billion for operations support, or $136
issue or revise regulations on the standards used to
million less than the amount enacted for FY2016 and $812
evaluate applications for tax exempt status by “social
million less than the budget request.
welfare” groups under section 501(c)(4) of the federal
tax code.
S. 3067, as reported, recommended that the IRS receive
$3.638 billion for operations support, or the same amount
that was enacted for FY2016 but $676 million less than the
budget request.
Gary Guenther, Analyst in Public Finance
IF10433
https://crsreports.congress.gov
Internal Revenue Service Budget, FY2017
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https://crsreports.congress.gov | IF10433 · VERSION 3 · UPDATED