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IRS fiscal 2012 appropriations could result in furloughs

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House appropriations committee-approved funding for the Internal Revenue Service will result in furloughs and a widening of the tax gap, charges Rep. Jose Serrano, (D-N.Y.), a ranking member of the House Appropriations subcommittee on financial services and general government.

The House committee voted June 23 to appropriate $11.5 billion to the IRS in the coming fiscal year, well below the tax agency's request of $13.27 billion. The Senate Appropriations Committee voted Sept. 15 for an amount roughly the same as their House counterparts--$11.66 billion. The new federal fiscal year starts on Oct. 1.

The House amount would require the IRS to furlough between 4,100 and 5,000 employees, mostly enforcement agents, says a minority statement in the report accompanying the House committee's markup.

"This will have a significant impact on the ability of the IRS to find tax cheats and will result in an increase in the estimated $345,000,000,000 tax gap," the statement adds.

Both committees would appropriate roughly $5.27 billion for IRS enforcement activities. Senate appropriators in their report say they support proposals to reduce the tax gap through increased examinations of businesses and high-income individuals, increased coverage of the automated Underreporter Program, "and increased audits involving flow-through entities."

House appropriators, meanwhile, say in their report that the IRS cannot use enforcement funds to verify that individuals have healthcare coverage, or impose penalties on those who did not.

"Legally requiring Americans to buy health insurance violates the basic principles of freedom and individual choice," House appropriators say. The Supreme Court is expected to take up in 2013 the constitutionality of the health care reform law approved by Congress and President Barack Obama in 2010 requiring Americans to carry health insurance.

For more:
- go to the THOMAS page for the House fiscal 2012 Financial Services and General Government Appropriations Act (H.R. 2434)
- go to the THOMAS page for the Senate fiscal 2012 Financial Services and General Government Appropriations Act (S. 1573)

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