Democratic Lawmakers Emphasize More IRS Funding for Fiscal 2021

Chu, Pascrell Lead Members Demanding Adequate IRS Funding to Pursue Wealthy Tax Cheats

Restoring public trust in tax collection essential

November 30, 2020

WASHINGTON, DC — U.S. Reps. Judy Chu (D-CA-27), a member of the House Ways and Means Subcommittee on Oversight, and Bill Pascrell, Jr. (D-NJ-09), the Chairman of the House Ways and Means Subcommittee on Oversight, led 25 House members in a letter to House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell, and House and Senate Appropriations leaders calling on them to retain the House-passed funding level of $12.1 billion for the Internal Revenue Service (IRS), including $5.2 billion for enforcement activities. As public trust in the IRS wanes, maintaining these amounts is essential to allowing the agency to pursue wealthy tax scofflaws and protect taxpayer dollars from fraud.

“The strength of IRS enforcement activities must be a priority for Congress, especially considering the additional measures Congress enacted under the CARES Act to lessen the financial burden of the COVID-19 pandemic,” the members write. “Again, we strongly support $12.1 billion for IRS in the final FY 2021 appropriations bill, especially for enforcement.”

Recent reports highlight that the IRS disproportionately pursues audits of poorer Americans, including Earned Income Tax Credit (EITC) recipients, while ignoring rampant tax fraud by the wealthy.

The Congressional Budget Office has found that increasing the IRS's budget to investigate high-income Americans would more than pay for itself. Specifically, increasing the examinations and collections budget by $20 billion over 10 years increases revenues by $61 billion, and if it is raised by $40 billion over 10 years it would increase revenues by $103 billion.

Chairman Pascrell has been one of the foremost critics in Congress of the IRS's politicization under Donald Trump. On October 13, Pascrell convened a hearing on tax fairness that highlighted the IRS's illegal withholding of Donald Trump's tax returns from Congress for a year and a half. On November 20, Pascrell convened another hearing to question IRS Commissioner Charles Rettig on this issue as well as on IRS funding, audit fairness and delayed delivery of Economic Impact Payment and tax refund issues.

The letter is signed by Reps. Chu, Pascrell, Don Beyer (D-VA-08), John Larson (D-CT-01), Earl Blumenauer (D-OR-03), Gwen Moore (D-WI-04), Steve Cohen (D-TN-09), Jerrold Nadler (D-NY-10), Joe Courtney (D-CT-02), Eleanor Holmes Norton (D-DC), Danny Davis (D-IL-07), Jimmy Panetta (D-CA-20), Peter DeFazio (D-OR-04), Linda Sánchez (D-CA-38), Rosa DeLauro (D-CT-03), Terri Sewell (D-AL-07), Suzan DelBene (D-WA-01), Jackie Speier (D-CA-14), Lloyd Doggett (D-TX-35), Tom Suozzi (D-NY-03), Dwight Evans (D-PA-03), Mark Takano (D-CA-41), Brian Higgins (D-NY-26), Dan Kildee (D-MI-05), and Suzanne Bonamici (D-OR-01).

The text of the members' letter is provided below.

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November 25, 2020

The Honorable Nancy Pelosi
Speaker
United States House of Representatives
Washington DC, 20515

The Honorable Mitch McConnell
Majority Leader
United State Senate
Washington DC, 20510

The Honorable Michael Quigley
Chair, Subcommittee on Financial Services and General Government
Committee on Appropriations
United States House of Representatives
Washington DC, 20515

The Honorable Kennedy
Chair, Subcommittee on Financial Services and General Government
Committee on Appropriations
United State Senate
Washington DC, 20510

The Honorable Steve Womack
Ranking Member, Subcommittee on Financial Services and General Government
Committee on Appropriations
U.S. House of Representatives
Washington DC, 20515

The Honorable Chris Coons
Ranking Member, Subcommittee on Financial Services and General Government
Committee on Appropriations
United State Senate
Washington DC, 20510

Dear Speaker Pelosi, Majority Leader McConnell, Chairman Quigley, Chairman Kennedy, Ranking Member Womack, and Ranking Member Coons:

As you work to finalize the Fiscal Year (FY) 2021 Financial Services and General Government (FSGG) appropriations bill, we urge you to retain the House-passed funding level of $12.1 billion for the Internal Revenue Service (IRS), including $5.2 billion for enforcement activities that are critical to ensuring compliance with our voluntary tax system and protecting taxpayer dollars from fraud.

The strength of IRS enforcement activities must be a priority for Congress, especially considering the additional measures Congress enacted under the CARES Act to lessen the financial burden of the COVID-19 pandemic. For example, the IRS's Criminal Investigation division identified $2.3 billion in tax fraud in FY 2020, up $500 million or almost 28 percent from 2019. According to the recent FY 2020 report, much of the group's work in recent months has focused on fraud connected to economic relief lawmakers passed this year in response to the coronavirus pandemic, including cases of fraudulent claims for economic impact payments, Paycheck Protection Program loans and refundable payroll tax credits.

Recent estimates by the Congressional Budget Office underscore the importance of IRS enforcement activities, noting that increasing the IRS's budget to investigate high-income individuals would more than pay for itself by allowing the IRS to effectively collect unpaid taxes owed by the wealthiest individuals. Specifically, increasing the examinations and collections budget by $20 billion over 10 years increases revenues by $61 billion, and if it is increased by $40 billion over 10 years it would increase revenues by $103 billion. This is a matter of tax fairness as well. The IRS should not continue an enforcement program focused on low-income taxpayers, singling out Earned Income Tax Credit (EITC) recipients, just because it is cheaper and easier. We urge you to preserve the $5.2 billion level of funding from the House-passed FSGG appropriations bill in order to ensure IRS can effectively collect taxes, including those owed by the top 1% of taxpayers.

Again, we strongly support $12.1 billion for IRS in the final FY 2021 appropriations bill, especially for enforcement. Thank you for your attention to this important matter.

Sincerely,