Internal Revenue Service Appropriations, FY2019

Internal Revenue Service Appropriations, FY2019

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Updated March 4, 2019
Internal Revenue Service Appropriations, FY2019
Overview
The Trump Administration requested $11.135 billion in
The Internal Revenue Service (IRS) has two main statutory
appropriations for the IRS in FY2019, or $296 million less
responsibilities: to collect most of the revenue needed to
than the enacted amount for FY2018. This reduction
fund the federal government and to enforce federal tax laws
reflected an added $94 million to maintain FY2018 levels
and regulations. In FY2017, the agency processed 245.4
of operation, $13 million in anticipated efficiency savings,
million tax returns and other documents and collected $3.4
$13 million in added investment in IRS’s information
trillion in gross revenue.
technology (IT) infrastructure, $317 million in program
decreases, and program increases of $199 million. Foremost
Appropriations typically provide most of the funds
among the requested program decreases were a cut of $138
available for obligation by the IRS: in FY2017, 94% of
million for IRS’s toll-free telephone service for taxpayers
those funds ($11.235 billion) came from appropriations.
and a transfer of $178 million from the BSM program to
The remaining 6% ($710 million) consisted of
OS. Requested funding for program increases would have
reimbursements from other government agencies, offsetting
been used mostly to enhance the security of IRS’s
collections, user fees, and unobligated balances from
information systems.
previous years. Under current law, the IRS is free to use
these miscellaneous funds as it sees fit, without
In addition, the Trump Administration proposed a program
congressional approval.
integrity cap adjustment in FY2019 (under §251(b)(2) of
the Balanced Budget and Emergency Deficit Control Act of
Historically, the agency’s appropriated funds have been
1985; P.L. 99-177) of $362 million to pay for “new and
distributed among four accounts: taxpayer services (TS),
continuing” investments in IRS’s enforcement programs
enforcement, operations support (OS), and business systems
aimed at reducing the federal tax gap, which is the
modernization (BSM). As shown in Table 1, enforcement
difference between the amount of federal taxes paid in full
accounted for 43% of the $11.431 billion in enacted
and on time in a tax year and the total amount of taxes
appropriations for the IRS in FY2018, followed by OS
owed. Of the proposed cap adjustment, $205 million would
(32%), TS (22%), and BSM (1%). Congress added $320
have applied to the enforcement account, and $157 million
million (3%) to the IRS budget in FY2018 to pay for the
to the OS account. The IRS estimated that these
cost of implementing the tax revision law (P.L. 115-97).
investments, plus others planned through FY2023, would
have yielded a net revenue gain of $29 billion over 10
Table 1. Internal Revenue Service’s FY2018 and
years. The cap adjustments would have given the IRS
FY2019 Appropriations, Excluding Non-Appropriated
additional budget authority under the discretionary
Funds
nondefense spending caps for FY2019 specified in the
(millions of dol ars)
Bipartisan Budget Act of 2018 (P.L. 115-123). No cap
adjustment is allowed under current law for IRS’s
FY2018
FY2019
FY2019
enforcement activities.
Account
Enacted
Request
Enacted
Individual Appropriations Accounts
Taxpayer
$2,507
$2,241
$2,492
Services
Taxpayer Services
Enforcement
4,860
4,628
4,860
The Trump Administration’s FY2019 budget request for the
IRS included $2.241 billion in appropriations for taxpayer
Operations
3,634
4,313
3,724
services, or $266 million less than the enacted amount for
Support
FY2018. Of the requested amount, $8.9 million was
Business Systems
designated for the Tax Counseling for the Elderly (TCE)
110
110
150
Modernization
Program, $12.0 million in matching grants for low-income
taxpayer clinics, $15.0 million in matching grants for the
Administrative
320
0
77
Volunteer Income Tax Assistance (VITA) Program
Provision
(available through September 30, 2020), and $206 million
for the Taxpayer Advocate Service (TAS).
Total
$11,431
$11,135
$11,303
Source: IRS’s FY2019 Budget Justification and Conference Report
P.L. 116-6 (the Consolidated Appropriations Act, FY2019)
(H.Rept. 116-9) for H.J.Res. 31 (Consolidated Appropriations Act,
grants the IRS $2.492 billion in appropriations for taxpayer
2019; P.L. 116-6).
services in FY2019, or $15 million less than the enacted
amount for FY2018. Of the amount enacted for FY2019,
$9.9 million is set aside for the TCE program, $18.0 million
https://crsreports.congress.gov

Internal Revenue Service Appropriations, FY2019
for the VITA matching grants program (the funds will
Business Systems Modernization
remain available until the end of FY2020), and $12.0
The Trump Administration requested $110 million in
million for the low-income taxpayer clinic matching grants
appropriations for the BSM Program in FY2019, or the
program. The TAS is receiving $207 million for its
same amount that was enacted for FY2018. The funds were
operating expenses; $5.5 million of that amount must be
to remain available until September 30, 2021.
used for “identity theft and refund fraud casework.”
P.L. 116-6 increases the appropriations for BSM to $150
Enforcement
million in FY2019. No later than 30 days after the end of
For FY2019, the Trump Administration requested $4.628
each quarter in 2019, the IRS is required to submit a report
billion for tax law enforcement, or $132 million less than
to both appropriations committees and the U.S. Comptroller
the amount enacted for FY2018. Of the requested amount,
General on the cost and schedule performance of the
$50 million was to be available through the end of FY2020,
agency’s major IT investments under the BSM program.
and $60.3 million was reserved for the Interagency Crime
and Drug Enforcement Program. An additional $205
Administrative Provisions
million was targeted at enforcement activities aimed at
P.L. 116-6 contains 16 administrative provisions that
reducing the federal tax gap, as an exemption from the
specify the activities that the IRS should and should not
discretionary nondefense spending caps in P.L. 115-123.
engage in during FY2019. Some provisions are more
controversial than others. The following provisions have
P.L. 116-6 gives the IRS $4.860 billion for enforcement
sparked varying degrees of controversy in recent years:
activities in FY2019. Of this amount, $50 million will
remain available until September 30, 2020, and $60.3
 Section 106 of the act prohibits the IRS from using
million is set aside for IRS’s participation in the
appropriated funds to “target” U.S. citizens for
Interagency Crime and Drug Enforcement Program.
exercising their First Amendment rights.
Operations Support
 Section 107 bars the IRS from using appropriated funds
The Trump Administration asked for $4.313 billion in
to “target” specific groups for added scrutiny because of
appropriations for OS in FY2019, or $679 million more
their “ideological beliefs.”
than the enacted amount for FY2018. Of the requested
amount, $250 million was to be available through the end
 Section 111 prohibits the IRS from using appropriated
of FY2020 and $10 million was to be available until spent
funds to develop and implement a return-free or pre-
for the acquisition of equipment and the repair,
populated filing system.
construction, and renovation of facilities. In addition, the
budget request called for another $157 million in budget
 Section 112 grants the IRS an additional $77 million
authority for OS through an adjustment of the caps on
through the end of FY2020 for the purpose of
discretionary nondefense spending in FY2019 under P.L.
implementing the tax changes in P.L. 115-97. The funds
115-123.
cannot be used until the IRS Commissioner submits a
plan for their use to both appropriations committees.
Under the Consolidated Appropriations Act, 2019, the IRS
This provision continues a practice that Congress started
is receiving $3.724 billion in appropriations for OS in
in FY2016 of increasing the funds available to the IRS
FY2019. Of this amount, $50 million will remain available
but subjecting their use to a stringent set of guidelines.
through the end of FY2020; $10 million will remain
available until spent for the acquisition of equipment and
 Section 125 prohibits the IRS from using appropriated
the construction, repair, or renovation of facilities; and $1
funds to “issue, revise, or finalize” any regulation or
million will be available for research until September 30,
ruling or guidance unrelated to a specific taxpayer
2021.
concerning the standard for determining whether an
organization is operated exclusively for the promotion
The act also requires the IRS to submit a report to both
of social welfare under Section 501(c)(4). The standard
appropriations committees and the U.S. Comptroller
and definitions used on January 1, 2010, will continue to
General on the cost and “schedule performance” of certain
guide the determination of an entity’s status under
aspects of its major IT investments. The agency’s budget
Section 501(c)(4) after the act’s date of enactment.
request for FY2020 should include a summary of the cost
and schedule performance of the major IT systems funded
Gary Guenther, Analyst in Public Finance
through the OS account.
IF10966

https://crsreports.congress.gov

Internal Revenue Service Appropriations, FY2019

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https://crsreports.congress.gov | IF10966 · VERSION 2 · UPDATED