Monday, March 23, 2015

IRS Asking For A $2 Billion Budget Increase

This is a review of J. Russell George, Treasury Inspector General for Tax Administration's testimony to the Senate Appropriations Subcommittee on Financial Services And General Government.

According to the testimony of J. Russell George the TIGTA is "statutorily mandated to provide independent audit and investigative services necessary to improve the economy, efficiency, and effectiveness of the IRS." He goes on to say that it is "designed to identify high risk systemic inefficiencies in IRS operations and to investigate exploited weaknesses in tax administration." Published on March 3, the document represents a review of the Administration's Fiscal Year 2016 Funding Request for the Department of the Treasury and the IRS.

The Administration is asking for $12.9 billion, an increase of $2 billion, or approximately 18 percent more than FY 2015. This is after a $346 million reduction from 2014 to 2015. The request includes a net staffing increase of 9,245 Full-Time Equivalents (FTE) for a total of approximately 90,524 appropriated FTEs. The largest increases by department or functional area were in Business Systems Modernization and Operations Support.

Clearly, TIGTA George believes the IRS has done a good job of maintaining operations considering the budgetary cuts from mandated sequestration, reduced staffing and the loss of supplementary funding, but he also believes there's over $5 billion on the table in cost savings that could be made by 1) closing loopholes on known tax fraud scams, 2) requiring tele-work employees to share workstations, 3) allowing tax payers to file amended returns electronically, 4) being able to measure revenue coming in from enforcement activity, and 5) eliminating erroneous carry-forwards claimed by corporations.

The TIGTA believes many of the IRS' current shortfalls in service, technology or enforcement are due to budget cuts, however, he also believes there are many opportunities for the organization to save money. Namely, a $111 million cost savings over a 5 year period for requiring tele-work and part-time employees to share workstations. The report estimates that 10,244 workstations could potentially be eliminated. The report also faults the IRS with mismanagement of software licensing and estimates the issue could cost the IRS $81 million and $114 million in licenses and annual license maintenance that could be eliminated if managed properly. The IRS agreed with the assessment and has already taken steps toward implementation.

In addition to cost savings the TIGTA also found $439 million in potentially erroneous tax refunds claimed on 187,421 amended returns in FY 2012. Amended tax returns can't be filed electronically so there's a higher incidence of error. A statistical sample of 259 amended tax returns by the TIGTA identified 17 percent with questionable claims.  According to the TIGTA, allowing taxpayers to file amended returns electronically could "prevent the issuance of more than $2.1 billion in erroneous refunds associated with amended tax returns". The IRS has also agreed to expand filing for amended returns.

Finally, the TIGTA accused the IRS of failing to create a process to identify corporations claiming erroneous carry-forward credits and estimates the errors total more than $2.7 billion. Even more startling is that the IRS does not plan to implement this recommendation due to lack of IT resources and more pressing priorities.

So, net/net the IRS is asking for a $2 billion increase, when the TIGTA has pointed out several ways for the agency to pull in over $5 billion. To be fair, some of these suggestions do cost money. Let's hope the budget approval is conditional on implementing at least some of these suggestions.

If you like what you're reading, please join my mailing list to receive blog posts and updates as they occur. If you're an investor with all of your assets tied up in the stock market and cash, you might want to consider a few diversification strategies. Gold is the oldest asset in the world and it's inflation proof. Bitcoin is the gold standard for the cryptocurrency world, which is the fastest growing asset class in the world. Diversifying your portfolio into one or both of these assets can help to insure your portfolio against a stock market crash or inflation. Most importantly, it can help to safeguard the gains you've made over the last 10 years.

Please note that there are other companies that sell gold and Bitcoin on the market, and you should always do your research when making decisions about your portfolio. Just like your personal health, if you're planning on having major surgery, you need to get a second, and sometimes a third, opinion. You want to make sure your surgeon is good and has performed the procedure many, many times.  In the same way, you need to trust your broker and you need to make sure they are reputable. This is the process I used when looking for a broker to recommend.

Full disclosure: RegalAssets compensates me for everyone I send their way, but I would receive compensation from any company I chose to recommend. The only broker I'm recommending is Regal, primarily due to its innovative product offering in my favorite commodities - gold, precious metals and cryptocurrency like Bitcoin. They also have a distinguished track record for success (see below).

Next Steps: Use Regal as one of your options and compare against them. Your other brokers should be able to offer the same level of service and the same low rates. The kit is free and it will provide you with a basis for comparison. Don't wait, get started today. Fill out the form below to get your free investment kit.

If you're interested in learning more about gold investments, click here to receive a free gold investment kit from Regal Assets.

If you're interested in learning more about Bitcoin investments, click here to receive a free Bitcoin investment kit from Regal Wallet.

Featured Post

Can Digital Currency (Bitcoin / M-Pesa) Wipe Out World-Wide Corruption & Poverty?

I often hear about all the alleged "criminal behavior" Bitcoin supports. I think it's important to discuss Bitcoin's p...

Popular Posts

Popular Older Posts