The Internal Revenue Service describes its mission as “[p]rovid[ing] America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and enforc[ing] the law with integrity and fairness to all.”1 Over the past few years, the IRS has had to fulfill this mission with shrinking resources, and in her recently released 2014 Annual Report to Congress, National Taxpayer Advocate Nina E. Olson noted that “the budget environment of the last five years has brought about a devastating erosion of taxpayer service, harming taxpayers individually and collectively.”2 Unfortunately, the problems caused by underfunding the IRS are likely to get worse before they get better: the appropriations bill passed by Congress last December further reduced the IRS’s budget to the point that it raises questions regarding the IRS’s ability to enforce the Internal Revenue Code fairly.

Budget Reductions for IRS

While the IRS’s nominal budget has increased modestly over the past 10 years, the agency has suffered substantial decreases when adjusted for inflation. In 2005, the IRS’s budget was $10.2 billion,3 which is approximately $12.4 billion in today’s dollars. By 2010, the IRS’s appropriations had increased to $12.1 billion,4 or approximately $13.1 billion in today’s dollars. However, the 2015 spending law slashes the IRS’s budget for the upcoming fiscal year to $10.9 billion,5 which amounts to an inflation-adjusted 12 percent reduction over the past 10 years, and a 17 percent decrease over the last five years. Indeed, IRS Commissioner John Koskinen has observed that, when adjusted for inflation, the agency’s budget has not been this low since 1998.6

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