Durbin Chairs Hearing to Review the IRS Budget

[WASHINGTON, D.C] – Assistant Senate Majority Leader Dick Durbin (D-IL) chaired an Appropriations Subcommittee hearing today on the FY12 funding request for the Internal Revenue Service (IRS). The IRS, which spent over $7 billion on enforcement of our tax laws last year, was pressed by Durbin about high profile cases of tax fraud, including reports that prisoners have received nearly $125 million in bogus tax refunds over the last five years. Durbin also raised questions about the oversight of popular tax credit programs.


“The IRS collects the revenues that fund 96% of all Federal government operations and public services and is the face of our government to more US citizens than any other agency,” Durbin said. “But when we hear stories of felons fleecing taxpayers from jail and as Congress adds more tax credits to stimulate the economy, real concerns are raised about the IRS’ ability to keep up.”


Earlier this year, a Treasury Inspector General for Tax Administration (TIGTA) report claimed that the number of prisoners who filed bogus tax returns more than doubled, costing tax payers nearly $125 million. In 2009 alone, 44,944 prisoners filed false returns.


A separate TIGTA report also found that new tax credit Congress included in economic stimulus proposals, were straining the IRS as they are forced to keep tabs on popular credits. The report found that of 5 million taxpayers who claimed a credit, over 300,000 claimed more than $230 million in credits for which they were not eligible.


The President’s budget requested $13.6 billion for the next fiscal year, amounting for just over half of the total discretionary funding under the jurisdiction of the Subcommittee on Financial Services and General Government. That accounts for a 9.3% increase over the FY11 enacted level. In FY10, the IRS collected $2.35 trillion in taxes, processed 230 million tax returns, issued 109 million refunds and answered 47 million taxpayers with questions about their taxes.


Testifying at today’s hearing was IRS Commissioner, Doug Shulman.


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