Senate committee fully funds IRS modernization

Full funding for Internal Revenue Service modernization efforts next fiscal year gained Senate Appropriations Committee endorsement Thursday.

As part of committee’s July 21 vote to approve the Transportation, Treasury, the Judiciary, House and Urban Development and Related Agencies Appropriations Act of 2006, lawmakers approved $199 million for IRS modernization, which is the amount that IRS officials requested for the program.

The corresponding House spending bill, which passed the floor June 30, likewise funds the agency’s Business Systems Modernization (BSM) program at the full requested amount of $199 million.

In a report accompanying the Senate bill, lawmakers wrote that the committee “recognizes that the success or failure of BSM will directly impact the IRS’s ability perform its functions in both customer service and enforcement.”

Like the House, however, the Senate committee also included language that would prevent the agency from closing 68 of the 400 tax assistance centers the IRS wants to shut down.

In language similar to the House version, Senate lawmakers said they question the methodology IRS officials used to choose which centers to close, and instructed the agency to keep the centers open until the Treasury Inspector General for Tax Administration reviews what customer service impact the closures would have.

The IRS has justified closing down the walk-in centers by pointing to increased use of its Web site and toll-free telephone assistance. But decreased use of the assistance centers is a deliberate result of an IRS policy to reduce patronage, Senate lawmakers stated in the report.

The reduction in demand “became a self-fulfilling prophecy and not one justified by reduced taxpayer needs or demands for such services,” they wrote.

Senate appropriators also voted to fully fund IRS overseers at the Treasury Inspector General for Tax Administration, satisfying the auditors’ request for $133 million, $5.2 million more when compared with this year. The House version of the spending bill does the same.