The IRS was the big loser in the 2014 budget agreement
The Internal Revenue Service is one of the biggest losers in the 2014 budget deal agreed to 聽by House and Senate negotiators. Under聽, the service would get just $11.3 billion, which is $526 million below its 2013 budget and $1.7 billion less than President Obama requested.
According to the House Appropriations Committee, the funding level would be lower than agency spending in 2009. The agreement would also require the IRS to spend more time and energy reporting to Congress on a range of activities. And, to the surprise of no one, it prohibits the use of any funds to single out groups based on their ideological beliefs or 鈥渢o target citizens for exercising their First Amendment rights.鈥�
Those restrictions, of course, explain what this budget is really聽about: More political payback for the IRS鈥檚聽to sort out which non-profits qualify for 501(c)(4) designation. While congressional Republicans聽tried mightily to pump up that episode into a major scandal, there is little evidence that the agency engaged in any nefarious political targeting. Rather, a combination of bad judgment and poor management resulted in the agency messing up a task for which it is singularly ill-suited鈥揹efining appropriate political speech.
If you like irony, you might keep in mind that the 501(c)(4) mess was caused in part by a lack of resources. The short-staffed agency was so overwhelmed by requests for tax-exempt status that poorly trained workers tried to shrink the backlog with what turned out to be clumsy shortcuts (word searches for 鈥渢ea party,鈥� 鈥減rogressive,鈥� and the like). This will now get worse thanks to聽Congress and the new budget. 聽For a nice summary of the consequences of IRS budget cuts, check out聽聽of the Taxpayer Advocate.
In addition, by limiting the ability of the agency 鈥渢o target citizens for exercising their First Amendment rights,鈥� the spending bill could end up hamstringing IRS efforts to sort out the mess through a package of聽. 聽It could also open the door to political groups further stretching 501(c)(4) status to avoid public disclosure of their funders.
In case anybody missed the message, the agreement even included a $6 million thank-you gift for Treasury鈥檚 Inspector General for Tax Administration (TIGTA), the shop whose initial investigation led to last year鈥檚聽tea party firestorm. TIGTA got about $156 million鈥攁 boost from the $150 million requested by the Administration鈥攅ven though its own probe turned out to be more than a little sloppy.
That Hill Republicans enthusiastically bashed the IRS was entirely expected. Sadly, neither congressional Democrats nor the White House seemed to have made much of an effort to defend the agency. In their haste to get a budget deal鈥攁ny budget deal鈥攏obody was prepared to take the blame for threatening another government shutdown to protect the IRS.
Even in the best of times, the agency has few friends on Capitol Hill or at the White House. If it cracks down too hard on fraud, it is accused of setting 鈥渏ack-booted thugs鈥� loose on innocents. If it eases up on enforcement, it is accused of being complicit in a massive tax gap that increases the budget deficit.
And that鈥檚 in good times. As the IRS, under the new leadership of Washington vet John Koskinen, attempts to dig its way out of a largely self-generated mess, this is clearly not the best of times.
