Public
Policy
Independent Sector recognizes that effective oversight of the charitable
sector requires vigorous enforcement of the law at both the federal and
state levels as well as regular education and outreach by the Internal Revenue Service. To that end, IS is actively working to increase federal resources
allocated to the Internal Revenue Service by Congress for enforcement activities and taxpayer services.
In addition to strengthening the charitable sector, increased IRS resources will improve the nation’s fiscal outlook by aiding the Service in narrowing the federal tax gap, and ultimately reducing the federal deficit. See below for:
Senate Appropriations Committee Clears IRS FY08 Spending Levels 7/12/07
On July 12, the Senate Appropriations Committee approved a spending bill (H.R. 2829) that would fund the Internal Revenue Service at $11.1 billion in FY2008, $550 million above FY2007 and $46 million above the President’s budget request.
Significantly, the report accompanying the bill, which indicates the Senate’s additional directives on how they expect funds to be allocated, includes specific instructions regarding educational services provided to charitable exempt organizations:
“The Committee is encouraged by recent IRS actions to invest greater resources in activities that educate charitable exempt organizations about their obligations under the tax code, helping to increase voluntary compliance and strengthen charities' ability to improve lives and communities. The Committee anticipates that the IRS will utilize the increased resources in this appropriation to continue to expand outreach to and education of charitable organizations, particularly in light of recent, sweeping changes to tax-exempt laws in the Pension Protection Act and other statutes.” (S. Rept. 110-129, p. 26) (PDF)
Other language in the report, while not as direct, encourages attention to the funding needs of IRS enforcement efforts (see p. 28). The full Senate is slated to take up the Financial Services Appropriations bill in September.
House Approves Bill to Increase IRS Budget 6/28/07
By a vote of 240-179, House lawmakers on June 28 approved a spending bill (H.R. 2829) that would fund the Internal Revenue Service at $11.1 billion in FY2008, $550 million above FY2007 and $52 million above the President’s budget request. The funding above the President's request would primarily be allocated to taxpayer services, which would be funded at $3.6 billion or $74.6 million over FY2007. Meeting the President’s request, enforcement activities would be funded at $7.2 billion, an increase of $406 million over FY2007. The House Appropriations Committee previously unanimously approved the bill on June 11.
- See a summary (PDF) of H.R. 2829 on the House Appropriations Committee's website.
- See Subcommittee Chair Jose Serrano's June 5 statement (PDF) at the subcommittee markup of the bill on the House Appropriations Committee's website.
Independent Sector Calls for Increased IRS Funding in Testimony to Appropriators 5/23/07
On May 23, 2007, IS submitted testimony (PDF) to the Senate Appropriations Subcommittee on Financial Services and General Government urging lawmakers to rely on the IRS Oversight Board’s budget recommendation of $11.406 billion when determining the IRS’s FY2008 budget. The IRS Oversight Board’s recommendation (PDF) for the IRS exceeds the President’s budget request by $310.1 million, with increases particularly in the area of enforcement. IS noted that increased resources would enable the IRS to continue to ensure effective oversight of the nonprofit community and enforcement of our tax laws, while also maintaining outreach and education activities that teach charitable nonprofits about their obligations under tax law. IS sent a similar statement to the House Appropriations Subcommittee on Financial Services and General Government.
Final FY08 Budget Resolution Calls for Increased IRS Resources 5/22/07
The House and Senate on May 17 approved a final FY2008 budget resolution (S. Con. Res. 21) that fully funds the President’s budget request for the IRS and makes available $406 million for IRS enforcement activities through a discretionary cap adjustment. House and Senate Appropriations subcommittees will next develop their spending bills, with markups starting immediately in the House Appropriations Homeland Security Subcommittee and expected to begin in Senate Appropriations subcommittees in early June.
IS Submits Letter to Appropriators Encouraging Increased IRS Budget 4/10/07
In an April 10 letter to the leadership of the Senate and House Appropriations Financial Services and General Government Subcommittees, Independent Sector encourages the leaders to give strong consideration to increasing the IRS' FY2008 budget by relying on the IRS Oversight Board's forthcoming recommendation. In addition to helping to narrow the tax gap, IS notes that an increased IRS budget would allow the agency to offer and improve upon the resources that educate nonprofit organizations about new and existing tax laws, as well as provide the enforcement resources that deter intentional noncompliance.
- See the letter (PDF) IS sent to the Senate Appropriations Financial Services Subcommittee. The same letter was sent to Chairman Jose Serrano (D-NY) and Ranking Member Ralph Regula (R-OH) of the House Subcommittee.
House Approves FY08 Resolution Calling for Increased IRS Resources 4/3/07
The full House on March 29 approved a FY08 federal budget resolution (H. Con. Res. 99) that would fully fund the President's request and direct up to $406 million for IRS activities to enhance compliance with the Internal Revenue Code. The House and Senate will next work to resolve differences between their resolutions and approve a final, joint resolution.
Senate Passes FY08 Resolution, Provides Increased IRS Resources 3/26/07
On March 23, the full Senate approved a $2.96 trillion FY2008 federal budget resolution (S. Con. Res. 21) that, according to the Senate Budget Committee, “fully funds the President’s budget request for the IRS, including additional resources available through a discretionary cap adjustment that directs $399 million to IRS enforcement activities.” The additional enforcement resources are intended to contribute to efforts to narrow the nation’s tax gap, the difference between taxes owed and those paid.
President Calls for Increased IRS Funding in FY 2008 Budget Request 2/06/07
The President’s FY 2008 budget, released February 5, 2007, proposes a 6.3 percent increase in the Internal Revenue Service budget compared to FY 2007 funding levels. In total, the budget proposes allocating $11.095 billion to the Service, with $4.92 billion for enforcement activities and $2.1 billion for taxpayer services, increases of 5.7 percent and 2.7 percent, respectively. The funding increases are intended to help combat the nation’s tax gap, the difference between taxes owed and taxes paid. The budget estimates that the IRS could generate an additional $699 million in enforcement revenue annually if it were to receive the enforcement resources suggested by the President.
House and Senate Establish Appropriations Committees for the 110th Congress 1/24/07
The 110th congressional Appropriations Committees in both the House and Senate have been restructured to consist equally of 12 subcommittees. Treasury, and specifically Internal Revenue Service appropriations, will fall under the jurisdiction of the newly formed Financial Services and General Government Subcommittee. On the House side, Representative Jose Serrano (D-NY) will chair the Subcommittee, and Representative Ralph Regula (R-OH) will serve as ranking member. On the Senate side, Senator Richard Durbin (D-IL) will chair the Subcommittee, with Senator Sam Brownback (R-KS) serving as ranking member.
- See the complete membership of the House Appropriations Financial Services and General Government Subcommittee on the House Appropriations website.
- See the complete membership of the Senate Appropriations Financial Services and General Government Subcommittee on the Senate Appropriations website.
Independent Sector Submits Letter to President Bush 12/01/06
On November 22, 2006, Independent Sector sent a letter to President Bush, urging him to include in his fiscal year 2008 budget request continued increased funding for Internal Revenue Service enforcement and taxpayer service programs and a permanent IRA Rollover charitable giving incentive.
See IRS appropriations news and headlines from the 109th Congress.
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IRS Appropriations and the Tax-Exempt Sector
Over the past 20 years, funding for IRS oversight and education of exempt organizations has remained essentially constant, while the sector has nearly doubled in size and become even more complex. During the late 1990s, the agency’s oversight capacity in all arenas declined markedly as the agency increasingly allocated resources to taxpayer service. Recent increases in IRS funding have permitted the agency to collect increased revenue and conduct a greater number of audits of individuals, corporations, and tax-exempt organizations, while also enhancing taxpayer services. This additional funding has also allowed the IRS to undertake critical investigations into areas of concern in the tax-exempt sector, such as abuses by credit counseling agencies and nonprofit compensation practices. The agency also provides valuable guidance educating tax-exempt organizations about their obligations under current law.
These activities play the vital role of lessening abuse of charitable organizations and encouraging good practice by charities. They in turn nurture the public’s trust, the charitable community’s most valuable asset.
Panel on the Nonprofit Sector Recommends Increased IRS Enforcement
At the encouragement of the Chairman and Ranking Member of the
Senate Finance Committee, leading members of the charitable community
convened the Panel on the Nonprofit
Sector in October 2004 to consider and recommend actions to improve
the transparency and accountability of charitable organizations. A key
recommendation of the Panel is to increase resources allocated to the
IRS for oversight of charitable organizations as well as overall tax enforcement.
As noted by the Panel, effective oversight of the charitable sector requires
vigorous enforcement of the law. Education of charitable organizations
about changes in federal and state laws and reporting requirements is
also critical to increasing compliance. While recognizing the fiscal challenges
facing Congress, the Panel emphasized “that, without adequate resources
for oversight and enforcement, those who willfully violate the law will
continue to do so with impunity.” See the Panel
on the Nonprofit Sector’s recommendations.
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Last updated: August 7, 2007
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