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Excerpts of OMB Budget Appendix Summarize Proposed IRS Budget


Excerpts of OMB Budget Appendix Summarize Proposed IRS Budget

DATED
DOCUMENT ATTRIBUTES
[Editor's Note: Asterisks indicate omitted text.]

 

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INTERNAL REVENUE SERVICE

 

 

The Internal Revenue Service (IRS) collects the revenue that funds the Government and administers the Nation's tax laws. During 2014, the IRS processed 199 million tax returns and collected $3.1 trillion in taxes (gross receipts before tax refunds), totaling 93 percent of Federal Government receipts.

The IRS taxpayer service program assists millions of taxpayers in understanding and meeting their tax obligations. The IRS tax enforcement and compliance program deters taxpayers inclined to evade their responsibilities while pursuing those who violate tax laws.

The 2016 Budget provides $12,931 million for the IRS to implement key strategic priorities.

Enforcement Program. -- The Budget includes an Enforcement account increase to implement enacted legislation; protect revenue by identifying fraud and preventing issuance of questionable refunds including tax-related identity theft; increase compliance by addressing offshore tax evasion; strengthen examination and collection programs, including return preparer; and address compliance issues in the tax-exempt sector. This increase includes a program integrity cap adjustment totaling $667 million, which supports the Enforcement ($352 million) and the Operations Support accounts ($315 million), including a $5 million to transfer to the Alcohol and Tobacco Tax and Trade Bureau (TTB) for high return on investment (ROI) tax enforcement activities. The Budget proposes an amendment to section 251 of the Balanced Budget and Emergency Deficit Control Act (BBEDCA) of 1985, as amended, to provide a statutory change that will allow adjustments to the discretionary caps for additional IRS appropriations. To ensure full funding of the cost increases, this cap adjustment is permissible in 2016 only if the base level for the IRS Enforcement and Operations Support accounts are funded at $9,476 million. The new 2016 enforcement initiatives funded out of this cap adjustment will generate nearly $2.8 billion in additional annual enforcement revenue once the new hires reach full potential in 2018. At full performance, these resources are expected to generate an ROI of over $6-to-$1, not including the indirect revenue effect of the deterrence value of these enforcement investments, which is estimated to be at least three times the direct revenue impact. In addition to the new enforcement initiatives for 2016, the Budget also proposes new tax enforcement and compliance initiatives for the IRS and TTB funded via cap adjustments through 2020 and sustained with additional adjustments through 2025. In total, the proposal entails 10 years of cap adjustments costing $19 billion while generating $60 billion, for a net savings of $41 billion. See additional discussion in the Budget Process chapter in the Analytical Perspectives volume.

Taxpayer Service Program. -- The Budget includes a significant investment in Taxpayer Services that will allow the IRS to further improve customer service to meet taxpayer demand and continue delivering services to taxpayers using a variety of in-person, telephone, and web-based methods to help taxpayers understand their obligations, correctly file their returns, and pay taxes due in a timely manner. The IRS is committed to increasing the service options available through the IRS web site and mobile application, allowing more taxpayers to reach the IRS through the Internet. Notably, in 2014, there were more than 437 million visits to www.IRS.gov, and taxpayers checked their refund status more than 189 million times by accessing Where's My Refund? in English or Spanish on the IRS website. Taxpayers can also use automated features on the IRS toll-free phone system. Additionally, the IRS2Go mobile application has been downloaded 5.4 million times since its release.

Modernization Program. -- IRS modernization efforts focus on building and deploying advanced information technology systems, processes, and tools to improve efficiency and enhance productivity. Since 2012, the IRS has processed individual taxpayer returns on a daily processing cycle that has enhanced IRS tax administration and improved customer service by allowing faster refunds for more taxpayers, more timely account updates, and faster issuance of taxpayer notices. The Budget provides $379 million for the Business Systems Modernization (BSM) Program to expand the capabilities of the CADE 2 relational database and address IRS's financial material weakness, enhance the taxpayer's online experience and provide secure digital communications; complete the design, development, and testing of various estate and gift tax forms for electronic acceptance; and increase fraud detection, resolution, and prevention through use of the Return Review Program (RRP). RRP and the development of online services projects are now a part of the BSM program. Using leading-edge technologies that promote speed and enhance data analytics, RRP will advance IRS effectiveness in detecting, addressing, and preventing tax refund fraud and in protecting the Nation's revenue stream. RRP will eventually replace the legacy Electronic Fraud Detection System built in the mid-1990s. The Office of Online Services will lead the bureau's transition to the future of digital customer service by building on existing service delivery capabilities to simplify and improve the taxpayer's online experience, provide secure digital communications, and add more interactive capabilities to existing web self-service products.

 

Federal Funds

 

 

TAXPAYER SERVICES

 

 

For necessary expenses of the Internal Revenue Service to provide taxpayer services, including pre-filing assistance and education, filing and account services, taxpayer advocacy services, and other services as authorized by 5 U.S.C. 3109, at such rates as may be determined by the Commissioner, [ $2,156,554,000 ] $2,408,803,000, of which not less than [ $7,000,000 ] $5,600,000 shall be for the Tax Counseling for the Elderly Program, of which not less than [ $10,000,000 ] $12,000,000 shall be available for low-income taxpayer clinic grants, and of which not less than $12,000,000, to remain available until September 30, [ 2016 ] 2017, shall be available for a Community Volunteer Income Tax Assistance matching grants program for tax return preparation assistance, of which not less than $206,000,000 shall be available for operating expenses of the Taxpayer Advocate Service: Provided, That of the amounts made available for the Taxpayer Advocate Service, not less than $5,000,000 shall be for identity theft casework. (Department of the Treasury Appropriations Act, 2015.)

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 2.]

 

 

This appropriation provides resources for taxpayer service programs, which help taxpayers understand their tax obligations, correctly file their returns, and pay taxes due in a timely manner. The appropriation also supports a number of other activities, including forms and publications; processing of tax returns and related documents; filing and account services; and taxpayer advocacy services.

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 2.]

 

 

Employment Summary

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 2.]

 

 

ENFORCEMENT

 

 

For necessary expenses for tax enforcement activities of the Internal Revenue Service to determine and collect owed taxes, to provide legal and litigation support, to conduct criminal investigations, to enforce criminal statutes related to violations of internal revenue laws and other financial crimes, to purchase and hire passenger motor vehicles (31 U.S.C. 1343(b)), and to provide other services as authorized by 5 U.S.C. 3109, at such rates as may be determined by the Commissioner, [ $4,860,000,000 ] $5,399,832,000, of which not to exceed $150,000,000 shall remain available until September 30, 2017, and of which not less than [ $60,257,000 ] $57,493,000 shall be for the Interagency Crime and Drug Enforcement program: Provided, That, of the amounts provided under this heading, not less than $352,100,000, of which $5,000,000 shall be transferred to the Alcohol and Tobacco Tax and Trade Bureau, shall be for an additional appropriation for tax activities, including tax compliance to address the Federal tax gap, as specified for purposes of Section 251(b)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended. (Department of the Treasury Appropriations Act, 2015.)

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 3.]

 

 

This appropriation provides resources for the examination of tax returns, both domestic and international; the administrative and judicial settlement of taxpayer appeals of examination findings; technical rulings; monitoring employee pension plans; determining qualifications of organizations seeking tax-exempt status; examining the tax returns of exempt organizations; enforcing statutes relating to detection and investigation of criminal violations of the internal revenue laws and other financial crimes; identifying underreporting of tax obligations; securing unfiled tax returns; and collecting unpaid accounts. Further, the 2016 Budget protects revenue by identifying fraud and preventing the issuance of erroneous refund payments, including tax-related identity theft. A portion of the appropriation ($352 million) is requested as part of the $667 million total program integrity cap adjustment that will reduce the deficit through above-base funding for high return on investment tax enforcement and compliance initiatives, including $5 million to transfer to the Alcohol and Tobacco Tax and Trade Bureau. In conjunction with specified funds provided to the IRS Operations Support account, this increment will support tax compliance initiatives expected to generate nearly $2.8 billion in additional annual enforcement revenue once the new hires reach full potential in 2018. Language presented in this account, the Operations Support account, and Section 125 of the Department of the Treasury's Administrative Provisions is provided to effectuate the cap adjustment in conjunction with an amendment to section 251 of the Balanced Budget and Emergency Deficit Control Act (BBEDCA) of 1985, as amended.

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , pages 3-4.]

 

 

Employment Summary

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 4.]

 

 

HEALTH INSURANCE TAX CREDIT ADMINISTRATION

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 4.]

 

 

The Trade Act of 2002 established the Health Coverage Tax Credit (HCTC), a refundable tax credit for a portion of the cost of qualified insurance, which may be paid in advance. This credit is available to certain recipients of Trade Adjustment Assistance and Pension Benefit Guaranty Corporation pension beneficiaries who are aged 55-64.

The Congress expanded the HCTC program in the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), Sections 1899A-1899J. These increased benefits for certain HCTC eligible individuals include payment of 80 percent (up from 65 percent) of health insurance premiums, up to 24 months of coverage for qualified family members, and extension of COBRA benefits. The Omnibus Trade Act of 2010 (Public Law 111-344), Sections 111-118, extended these benefits until February 13, 2011. The bill to extend the Generalization System of Preference (Public Law 112-040), Section 241, extended the credit through December 31, 2013 and reduced the credit percentage to 72.5 percent, and eliminated the credit entirely as of January 1, 2014. Beginning in tax year 2014, the Patient Protection and Affordable Care Act (PPACA) of 2010 (Public Law 111-148) provides health care premium tax credits to eligible individuals to help purchase health coverage. However, outlays are expected from this account through 2016. This schedule reflects the effects of HCTC in cases where the credit exceeds the tax liability resulting in payment to the taxpayer.

 

OPERATIONS SUPPORT

 

 

For necessary expenses of the Internal Revenue Service to support taxpayer services and enforcement programs, including rent payments; facilities services; printing; postage; physical security; headquarters and other IRS-wide administration activities; research and statistics of income; telecommunications; information technology development, enhancement, operations, maintenance, and security; the hire of passenger motor vehicles (31 U.S.C. 1343(b)); and other services as authorized by 5 U.S.C. 3109, at such rates as may be determined by the Commissioner; [ $3,638,446,000 ] $4,743,258,000, of which not to exceed $315,000,000 shall remain available until September 30, [ 2016 ] 2017; of which not to exceed $65,000,000 shall remain available until expended for acquisition of equipment and construction, repair and renovation of facilities; of which not to exceed $1,000,000 shall remain available until September 30, [ 2017 ] 2018, for research; of which [ not less than ] not to exceed $1,850,000 shall be for the Internal Revenue Service Oversight Board; of which not to exceed $25,000 shall be for official reception and representation expenses: Provided, That not later than 30 days after the end of each quarter, the Internal Revenue Service shall submit a report to the Committees on Appropriations of the House of Representatives and the Senate and the Comptroller General of the United States detailing the cost and schedule performance for its major information technology investments, including the purpose and life-cycle stages of the investments; the reasons for any cost and schedule variances; the risks of such investments and strategies the Internal Revenue Service is using to mitigate such risks; and the expected developmental milestones to be achieved and costs to be incurred in the next quarter: Provided further, That the Internal Revenue Service shall include, in its budget justification for fiscal year [ 2016 ] 2017, a summary of cost and schedule performance information for its major information technology systems: Provided further, That, of the amounts provided under this heading, such sums as are necessary shall be available to fully support tax enforcement and compliance activities, including not less than $315,197,000, for an additional appropriation for tax activities, including tax compliance to address the Federal tax gap, as specified for purposes of Section 251(b)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended. (Department of the Treasury Appropriations Act, 2015.)

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , pages 4-5.]

 

 

This appropriation provides resources for support functions that are essential to the successful operation of IRS programs. These functions include: overall planning and direction of the IRS; shared service support related to facilities maintenance, rent payments, printing, postage, and security; resources for headquarters management activities such as communications and liaison, finance, human resources, equity, diversity and inclusion; research and statistics of income; protection of sensitive information and the privacy of taxpayers and employees; and necessary expenses for telecommunications support and the development and maintenance of IRS operational information systems. This appropriation also includes specific funds to support multi-year facility and real estate planning to improve the IRS investment process, as well as funds needed to implement an array of significant new tax legislation. A portion of the appropriation ($315 million) is requested as part of the $667 million program integrity cap adjustment that will reduce the deficit through above-base funding for high return on investment tax enforcement and compliance programs. In conjunction with specified funds provided to the IRS Enforcement account, this increment will support new tax compliance initiatives that are expected to generate high returns on investment in the form of increased tax revenues. In total, the proposal entails 10 years of adjustments costing $19 billion while saving $60 billion, for a net savings of $41 billion.

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 5.]

 

 

Employment Summary

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 5.]

 

 

BUSINESS SYSTEMS MODERNIZATION

 

 

For necessary expenses of the Internal Revenue Service's business systems modernization program, [ $290,000,000 ] $379,178,000, to remain available until September 30, [ 2017 ] 2018, for the capital asset acquisition of information technology systems, including management and related contractual costs of said acquisitions, including related Internal Revenue Service labor costs, and contractual costs associated with operations authorized by 5 U.S.C. 3109: Provided, That not later than 30 days after the end of each quarter, the Internal Revenue Service shall submit a report to the Committees on Appropriations of the House of Representatives and the Senate and the Comptroller General of the United States detailing the cost and schedule performance for CADE 2 and Modernized e-File information technology investments, including the purposes and life-cycle stages of the investments; the reasons for any cost and schedule variances; the risks of such investments and the strategies the Internal Revenue Service is using to mitigate such risks; and the expected developmental milestones to be achieved and costs to be incurred in the next quarter. (Department of the Treasury Appropriations Act, 2015.)

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 5.]

 

 

This appropriation provides resources for the planning and capital asset acquisition of information technology to modernize the IRS business systems, including labor and related contractual costs. The Government Accountability Office regularly reviews the status of key Business Systems Modernization (BSM) investments and the IRS submits quarterly information technology reports to the House and Senate Committees on Appropriations.

The projects within the BSM program represent investments to ensure that the IRS continues to move forward and use technologies to improve performance. The Budget provides investments to modernize core tax systems and fundamentally change how taxpayers interact with the IRS, including the creation of online tax filing status and payment options.

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 6.]

 

 

Employment Summary

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 6.]

 

 

BUILD AMERICA BOND PAYMENTS, RECOVERY ACT

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 6.]

 

 

The American Recovery and Reinvestment Act of 2009 (Public Law 111-5), Section 1531, allows State and local governments to issue Build America Bonds through December 31, 2010. These tax credit bonds, which include Recovery Zone Bonds, differ from tax-exempt governmental obligation bonds in two principal ways: (1) interest paid on tax credit bonds is taxable; and (2) a portion of the interest paid on tax credit bonds takes the form of a Federal tax credit. The bond issuer may elect to receive a direct payment in the amount of the tax credit for obligations issued before January 1, 2011.

 

PAYMENT WHERE EARNED INCOME CREDIT EXCEEDS LIABILITY FOR TAX

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 6.]

 

 

As provided by law, there are instances wherein the earned income tax credit (EITC) exceeds the amount of tax liability owed through the individual income tax system, resulting in an additional payment to the taxpayer. Congress originally authorized the EITC in the Tax Reduction Act of 1975 (Public Law 94-12) and made it permanent in the Revenue Adjustment Act of 1978 (Public Law 95-600). The Tax Reform Act of 1986 and the Omnibus Budget Reconciliation Acts of 1990 and 1993 increased the credit amount and expanded eligibility for the EITC.

The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) (Public Law 107-16) increased the income level at which the credit begins to phase out for married taxpayers filing joint returns, and made other changes to simplify the credit and improve compliance.

The American Recovery and Reinvestment Act of 2009 (ARRA) (Public Law 111-5), Section 1002, temporarily increased the EITC for working families with three or more children, and increased the threshold for the phase-out range for all married couples filing a joint return for 2009 and 2010 tax returns. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Public Law 111-312), Section 103(c), extended the EGTRRA and ARRA benefits through tax year 2012.

The American Taxpayer Relief Act of 2012 (Public Law 112-240), Section 103(c), extended the EGTRRA and ARRA benefits through tax year 2017 (a five-year extension).

 

PAYMENT WHERE EARNED INCOME CREDIT EXCEEDS LIABILITY FOR TAX

 

(Legislative proposal, subject to PAYGO)

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , pages 6-7.]

 

 

The Budget baseline assumes permanent extension (beyond 2017) of the Earned Income Tax Credit (EITC) for larger families and of EITC marriage penalty relief. The account also reflects the interaction effect with the proposals to expand the EITC for workers without qualifying children, rationalize tax return filing due dates so that they are staggered, and increase oversight and due diligence of tax return preparers.

 

PAYMENT WHERE CHILD TAX CREDIT EXCEEDS LIABILITY FOR TAX

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 7.]

 

 

As provided by law, there are instances where the child tax credit exceeds the amount of tax liability owed through the individual income tax system, resulting in an additional payment to the taxpayer.

The Congress originally authorized the child tax credit in the Taxpayer Relief Act of 1997 (Public Law 105-34). The credit amount and extent to which the credit is refundable were increased by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) (Public Law 107-16). The American Recovery and Reinvestment Act of 2009 (ARRA) (Public Law 111-5), Section 1003, further expanded the extent to which the credit is refundable. The credit was refundable to the extent of 15 percent of an individual's earned income in excess of $3,000 for 2010 and 2011. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Public Law 111-312), Section 103(b), extended this temporary benefit for 2011 and 2012. The American Taxpayer Relief Act of 2012 (Public Law 112-240), Section 103(b), extended the ARRA benefits through tax year 2017 (a five-year extension).

 

PAYMENT WHERE CHILD TAX CREDIT EXCEEDS LIABILITY FOR TAX

 

(Legislative proposal, subject to PAYGO)

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 7.]

 

 

The Budget baseline assumes permanent extension (beyond 2017) of the earned income threshold for the Child Tax Credit to $3,000. The account also reflects the interaction effect with the proposals to expand the Child and Dependent Care Tax Credit (CDCTC), provide a second earner tax credit, and to provide for automatic enrollment in individual retirement accounts (IRAs).

 

PAYMENT WHERE HEALTH COVERAGE TAX CREDIT EXCEEDS LIABILITY FOR TAX

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 7.]

 

 

The Trade Act of 2002 established the Health Coverage Tax Credit (HCTC), a refundable tax credit for a portion of the cost of qualified insurance, which may be paid in advance. This credit is available to certain recipients of Trade Adjustment Assistance (TAA) and Pension Benefit Guaranty Corporation pension beneficiaries who are aged 55-64.

The Congress expanded the HCTC program in the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), Sections 1899A-1899J. These increased benefits for certain HCTC eligible individuals include payment of 80 percent (up from 65 percent) of health insurance premiums, up to 24 months of coverage for qualified family members, and extension of COBRA benefits. The Omnibus Trade Act of 2010 (Public Law 111-344), Sections 111-118, extended these benefits until February 13, 2011. The bill to extend the Generalization System of Preference (Public Law 112-040), Section 241, extended the credit through December 31, 2013 and reduced the credit percentage to 72.5 percent, and eliminated the credit entirely as of January 1, 2014. However, outlays are expected from this account through 2016. This schedule reflects the effects of HCTC in cases where the credit exceeds the tax liability resulting in payment to the taxpayer.

 

PAYMENT WHERE COBRA CREDIT EXCEEDS LIABILITY FOR TAX

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 8.]

 

 

COBRA gives workers who lose their jobs, and thus their health benefits, the right to purchase group health coverage provided by the plan under certain circumstances. The American Recovery and Reinvestment Act of 2009 (Public Law 111-5), Section 3001, treated assistance eligible individuals who pay 35 percent of their COBRA premium as having paid the full amount. The remaining 65 percent is reimbursed to the employer, insurer or health plan as a credit against certain employment taxes. The Department of Defense Appropriation Act of 2010 (Public Law 111-118), Section 1010, extended the eligibility period for the COBRA Premium Assistance program from the original ending date of December 31, 2009 to February 28, 2010. The Continuing Extension Act of 2010 (Public Law 111-157), Section 3, amended the American Recovery and Reinvestment Act of 2009 to extend the premium assistance for COBRA benefits to employees involuntarily terminated through May 31, 2010. This credit has expired. No outlays are expected from this account beyond 2014.

 

PAYMENT WHERE SMALL BUSINESS HEALTH INSURANCE TAX CREDIT

 

EXCEEDS LIABILITY FOR TAX

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 8.]

 

 

The Patient Protection and Affordable Care Act (PPACA) of 2010 (Public Law 111-148), Section 1421, allows certain small employers (including small tax-exempt employers) to claim a credit when they pay at least half of the health care premiums for single health insurance coverage for their employees. Small employers can claim the credit for 2010 through 2013 and for two years after that. Generally, employers that have fewer than 25 full-time equivalent employees and pay wages averaging less than $50,000 per employee per year may qualify for the credit. The Budget proposes to expand the credit by increasing the maximum employer size, modifying the interaction of the employer size and wage phase-outs and simplifying eligibility requirements.

 

PAYMENT WHERE ALTERNATIVE MINIMUM TAX CREDIT EXCEEDS LIABILITY FOR TAX

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 8.]

 

 

The Tax Relief and Health Care Act of 2006 (Public Law 109-432) allowed certain taxpayers to claim a refundable credit for a portion of their unused long-term alternative minimum tax (AMT) credits each year. The Emergency Economic Stabilization Act of 2008 (Public Law 110-343), Division C, Section 103, increased the AMT refundable credit portion from 20 percent to 50 percent of unused long-term minimum tax credits for the taxable year in question. This provision was effective for any taxable year beginning before January 1, 2013 and has now expired. However, outlays are expected from this account through 2016 as reconciliations occur.

 

PAYMENT WHERE CERTAIN TAX CREDITS EXCEED LIABILITY FOR CORPORATE TAX

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 9.]

 

 

The Housing and Economic Recovery Act of 2008 (Public Law 110-289), Section 3081, allowed certain businesses to accelerate the recognition of a portion of their unused pre-2006 alternative minimum tax (AMT) or research and development (R&D) credits in lieu of taking bonus depreciation. The maximum increase amount is capped at the lesser of $30 million or 6 percent of eligible AMT and R&D credits. The accelerated credit amount is refundable. The American Recovery and Reinvestment Act of 2009 (Public Law 111-5), Section 1201(b), extended this temporary benefit through 2009. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Public Law 111-312), Section 401(c), extended this temporary benefit through the end of 2012, but only with respect to AMT credits. The American Taxpayer Relief Act of 2012 (Public Law 112-240), Section 331(c), extended this temporary benefit through 2013 only with respect to AMT credits. The Tax Increase Prevention Act, Title I -- Certain Expiring Provisions (Public Law 113-295), Section 125(c), extended this temporary benefit through 2014 only with respect to AMT credits.

 

PAYMENT IN LIEU OF TAX CREDITS FOR PROMISE ZONES

 

(Legislative proposal, subject to PAYGO)

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 9.]

 

 

The Administration proposes to designate 20 Promise Zones (14 in urban areas and six in rural areas), inclusive of the five zones that have already been chosen. Zone designations would become effective with regard to tax incentives in 2016 and would last for 10 years. The zones would be chosen through a competitive application process based on the strength of the applicant's "competitiveness plan," economic indicators, and other criteria. Two tax incentives would be applicable to designated promise zones after the incentives' enactment. First, an employment credit would be provided to businesses that employ zone residents that would apply to the first $15,000 of qualifying wages annually. The credit rate would be 20 percent for zone residents who are employed within the zone and 10 percent for zone residents employed outside of the zone. Second, qualifying property placed in service within the zone would be eligible for additional first-year depreciation of 100 percent of the adjusted basis of the property. Qualifying property would generally consist of depreciable property with a recovery period of 20 years or less.

 

PAYMENT WHERE AMERICAN OPPORTUNITY CREDIT EXCEEDS LIABILITY FOR TAX

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 9.]

 

 

The American Recovery and Reinvestment Act of 2009 (Public Law 111-5), Section 1004, allowed certain taxpayers to claim a refundable American Opportunity Tax Credit (AOTC) for qualifying higher education expenses, for tax years 2009 and 2010. Up to 40 percent of the credit is refundable. The credit applies dollar-for-dollar to the first $2,000 of qualified tuition, fees and course materials paid by the taxpayer, and applies at a rate of 25 percent to the next $2,000 in qualified tuition, fees and course materials for a total credit of up to $2,500. This tax credit is subject to a phase-out for higher-income taxpayers. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Public Law 111-312), Section 103(a), extended this credit to tax years 2011 and 2012. The American Taxpayer Relief Act of 2012 (Public Law 112-240), Section 103(a), extended the credit through tax year 2017 (a five-year extension). The Budget proposes to make the AOTC a permanent replacement (beyond 2017) of the Hope Scholarship credit.

 

PAYMENT WHERE AMERICAN OPPORTUNITY CREDIT EXCEEDS LIABILITY FOR TAX

 

(Legislative proposal, subject to PAYGO)

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 10.]

 

 

The Budget baseline assumes permanent extension of the American Opportunity Tax Credit. The account reflects the interaction effect with the proposals to provide IRS with greater flexibility to address correctable errors, to modify Form 1098-T for reporting tuition expenses, and to make the Pell Grants excludable from gross income.

 

PAYMENT TO ISSUER OF QUALIFIED ENERGY CONSERVATION BONDS

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 10.]

 

 

The Emergency Economic Stabilization Act of 2008 (Public Law 110-343), Section 301, created Qualified Energy Conservation Bonds; and the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), Section 1112, increased the limitation on issuance of qualified energy conservation bonds from $800,000,000 to $3,200,000,000.

The Hiring Incentives to Restore Employment Act (Public Law 111-147), Section 301, amended Section 6431 of the Internal Revenue Code of 1986 by allowing issuers of Qualified Energy Conservation Bonds to irrevocably elect to issue the bonds as specified tax credit bonds with a direct-pay subsidy. The issuer of such qualifying bonds receives a direct interest payment subsidy from the Federal Government. Bondholders receive a taxable interest payment from the issuer in lieu of a tax credit.

 

PAYMENT TO ISSUER OF NEW CLEAN RENEWABLE ENERGY BONDS

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 10.]

 

 

The Emergency Economic Stabilization Act of 2008 (Public Law 110-343), Section 107, created New Clean Renewable Energy Bonds, and the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), Section 1111, increased the limitation on issuance of New Clean Renewable Energy Bonds by $1,600,000,000.

The Hiring Incentives to Restore Employment Act (Public Law 111-147), Section 301, amended Section 6431 of the Internal Revenue Code of 1986 by adding a new subsection (f) allowing issuers of New Clean Renewable Energy Bonds to irrevocably elect to issue the bonds as specified tax credit bonds with a direct-pay subsidy. The issuer of such qualifying bonds receives a direct interest payment subsidy from the Federal Government. Bondholders receive a taxable interest payment from the issuer in lieu of a tax credit.

 

PAYMENT TO ISSUER OF QUALIFIED SCHOOL CONSTRUCTION BONDS

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 11.]

 

 

The American Recovery and Reinvestment Act of 2009 (Public Law 111-5), Section 1521, created Qualified School Construction Bonds with a calendar year limitation of $11,000,000,000 for 2009 and 2010 and zero after 2010.

The Hiring Incentives to Restore Employment Act (Public Law 111-147), Section 301, amended Section 6431 of the Internal Revenue Code of 1986 by adding a new subsection (f) allowing issuers of Qualified School Construction Bonds to irrevocably elect to issue the bonds as specified tax credit bonds with a direct-pay subsidy. The issuer of such qualifying bonds receives a direct interest payment subsidy from the Federal Government. Bondholders receive a taxable interest payment from the issuer in lieu of a tax credit.

 

PAYMENT TO ISSUER OF QUALIFIED ZONE ACADEMY BONDS

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 11.]

 

 

The American Recovery and Reinvestment Act of 2009 (Public Law 111-5), Section 1522, extended and expanded the calendar year limitation for Qualified Zone Academy Bonds to $1,400,000,000 for 2009 and 2010. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Public Law 111-312), Section 758, extended the Qualified Zone Academy Bonds for 2011 and reduced the calendar year limitation to $400,000,000. The American Taxpayer Relief Act of 2012 (Public Law 112-240), Section 310, extended the calendar year limitation of $400,000,000 through tax year 2013 (a two-year extension). The Tax Increase Prevention Act, Title I -- Certain Expiring Provisions (Public Law 113-295), section 120, extended the calendar year limitation of $400,000,000 through tax year 2014.

The Hiring Incentives to Restore Employment Act (Public Law 111-147), Section 301, amends Section 6431 of the Internal Revenue Code of 1986 by adding a new subsection (f) allowing issuers of Qualified Zone Academy Bonds to irrevocably elect to issue the bonds as specified tax credit bonds with a direct-pay subsidy. The issuer of such qualifying bonds receives a direct interest payment subsidy from the Federal Government. Bondholders receive a taxable interest payment from the issuer in lieu of a tax credit.

The Tax Relief, Unemployent Insurance Reauthorization and Job Creation Act of 2010 (Public Law 111-312) amended section 6431(f)(3)(A)(iii) to provide that direct pay treatment for Qualified Zone Academy Bonds is not available for Qualified Zone Academy Bond allocations from the 2011 national limitation or any carry forward of the 2011 allocation.

 

PAYMENT WHERE ADOPTION CREDIT EXCEEDS LIABILITY FOR TAX

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 11.]

 

 

The Patient Protection and Affordable Care Act of 2010 (Public Law 111-148), Section 10909, modified the existing adoption credit to make it a refundable credit for two years (2010 and 2011). The refundability provision has expired and the adoption credit is again limited to tax liability. No outlays are expected from this account in 2016.

 

THERAPEUTIC DISCOVERY PROGRAM GRANTS AND ADMINISTRATION

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 12.]

 

 

The Patient Protection and Affordable Care Act (PPACA) of 2010 (Public Law 111-148), Section 9023, provided tax credits and grants to qualifying entities that show significant potential to produce new and cost saving therapies, support U.S. jobs, and increase U.S. competitiveness. Credits and grants are for qualifying investments made during a taxable year beginning in 2009 or 2010. The total amount of credits and grants that may be allocated under the program shall not exceed $1,000,000,000 for the 2-year period beginning with 2009. This account also includes the administrative costs of carrying out the program, which constitute the projected account activity in 2014. The program has expired and no outlays are expected from this account in 2015 and 2016.

 

REFUNDING INTERNAL REVENUE COLLECTIONS, INTEREST

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 12.]

 

 

Under certain circumstances, as provided in 26 U.S.C. 6611, interest is paid on Internal Revenue collections that must be refunded. The Tax Equity and Fiscal Responsibility Act of 1982 (Public Law 97-248) provides for daily compounding of interest. Under the Tax Reform Act of 1986 (Public Law 99-514), interest paid on Internal Revenue collections will equal the Federal short-term rate plus two percentage points, with such rate to be adjusted quarterly.

 

REFUNDABLE PREMIUM TAX CREDIT AND COST SHARING REDUCTIONS

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 12.]

 

 

The Patient Protection and Affordable Care Act (PPACA) of 2010 (Public Law 111-148) established the Refundable Premium Tax Credit. This credit is an advanceable, refundable tax credit designed to help eligible individuals and families with low or moderate income afford health insurance purchased through the Health Insurance Marketplace, also known as the Exchange, beginning in 2014. The credit can be paid in advance to the taxpayer's insurance company to lower the monthly premiums, or it can be claimed when a taxpayer files their income tax return for the year. If the credit is paid in advance, the taxpayer must reconcile the amount paid in advance with the actual credit computed on the tax return.

Section 1402 of PPACA provides for reductions in cost sharing for certain individuals enrolled in qualified health plans purchased on the Exchanges. The reduction in cost sharing will first be achieved by reducing applicable out-of-pocket limits under Section 1302 of PPACA. An additional reduction will be allowed for lower income insured individuals and special rules will apply for Native Americans.

Section 1412 of the PPACA provides for advance payments of the premium tax credit and cost-sharing reductions.

The premium assistance tax credit has outlay effects of: 2014 $10,957; 2015 $23,560; 2016 $39,164; 2017 $52,192; 2018 $73,507; 2019 $86,218; 2020 $91,973; 2021 $96,739; 2022 $102,355; 2023 $107,220; 2024 $111,607; 2025 $116,788.

The premium assistance tax credit has income tax effects [a (-) indicates reduced receipts] of: 2014 $0; 2015 -$1,498; 2016 -$2,661; 2017 -$4,024;

 

REFUNDABLE PREMIUM TAX CREDIT AND COST SHARING REDUCTIONS

 

(Legislative proposal, subject to PAYGO)

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 13.]

 

 

This schedule reflects the impact of the Administration's proposals to extend the Children's Health Insurance Program and create a State option to provide 12-month continuous Medicaid eligibility for adults.

 

IRS MISCELLANEOUS RETAINED FEES

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 12.]

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 12.]

 

 

As provided by law (26 U.S.C. 7801), the Secretary of the Treasury may establish new fees or raise existing fees for services provided by the IRS to increase receipts, where such fees are authorized by another law, and may spend the new or increased fee receipts to supplement appropriations made available to the IRS appropriations accounts. Funds in this account are transferred to other IRS appropriations accounts for expenditure.

 

GIFTS TO THE UNITED STATES FOR REDUCTION OF THE PUBLIC DEBT

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 12.]

 

 

As provided by law (31 U.S.C. 3113), the Secretary of the Treasury is authorized to accept conditional gifts to the United States for the purpose of reducing the public debt.

 

PRIVATE COLLECTION AGENT PROGRAM

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 13.]

 

 

The American Jobs Creation Act of 2004 (Public Law 108-357) allowed the IRS to use private collection contractors to supplement its own collection staff efforts to ensure that all taxpayers pay what they owe. The IRS used this authority to contract with several private debt collection agencies starting in 2006. In March 2009, the IRS allowed its private debt collection contracts to expire, thereby administratively terminating the program.

 

INFORMANT PAYMENTS

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 13.]

 

 

As provided by law (26 U.S.C. 7623), the Secretary of the Treasury may make payments to individuals who provide information that leads to the collection of Internal Revenue taxes. The Taxpayer Bill of Rights of 1996 (Public Law 104-168) provides for payments of such sums to individuals from the proceeds of amounts collected by reason of the information provided, and any amount collected shall be available for such payments. This information must lead to the detection of underpayments of taxes, or detection and bringing to trial and punishment of persons guilty of violating the Internal Revenue laws. This provision was further amended by the Tax Relief and Health Care Act of 2006 (Public Law 109-432) to provide for mandatory payments in certain circumstances and to encourage use of the program. A reward payment typically ranges between 15 and 30 percent of the collected proceeds for cases where the amount of collected proceeds exceeds $2,000,000. Lower payments are allowed in certain circumstances, including cases in which information is provided that was already available from another source.

 

FEDERAL TAX LIEN REVOLVING FUND

 

 

[ Editor's Note: To view the table,

 

see Doc 2015-2500 , page 13.]

 

 

This revolving fund was established pursuant to Section 112(a) of the Federal Tax Lien Act of 1966, to serve as the source of financing the redemption of real property by the United States. During the process of collecting unpaid taxes, the Government places a tax lien on real estate in order to protect the Government's interest. Situations arise where property of this nature is collateral for other indebtedness and the tax lien is subordinate to the original indebtedness. In this circumstance, it is often in the Government's interest to purchase the property during the foreclosure sale. The advantage arises when the property is worth substantially more than the first lien-holder's equity but is being sold for an amount that barely covers that equity, thereby leaving no proceeds to apply against delinquent taxes. Under these circumstances, if the Government buys the property and subsequently puts it up for sale under more advantageous conditions, it is possible to realize sufficient profit on the transaction to fully or partially collect the amount of taxes due. The revolving fund is reimbursed from the proceeds of the sale in an amount equal to the amount expended from the fund for the redemption. The balance of the proceeds is applied against the amount of the tax, interest, penalties, and additions thereto, and for the costs of sale. The remainder, if any, would revert to the parties legally entitled to it.

 

INTERNAL REVENUE SERVICE OVERSIGHT BOARD

 

 

As directed by the Internal Revenue Service Restructuring and Reform Act of 1998 (Section 7802(d) 26 U.S.C.), the IRS Oversight Board shall provide an annual budget request for the IRS. The Oversight Board's request shall be submitted to the President by the Secretary without revision, and the President shall submit the request, without revision, to Congress together with the President's Budget request for the IRS. The 2016 Oversight Board budget recommendation for the IRS is $13,530 million.

 

ADMINISTRATIVE PROVISIONS -- INTERNAL REVENUE SERVICE

 

(INCLUDING TRANSFER OF FUNDS)

 

 

SEC. 101. Not to exceed 5 percent of any appropriation made available in this Act to the Internal Revenue Service may be transferred to any other Internal Revenue Service appropriation upon the advance [ approval ] notification of the Committees on Appropriations.

SEC. 102. The Internal Revenue Service shall maintain an employee training program, which shall include the following topics: taxpayers' rights, dealing courteously with taxpayers, cross-cultural relations, ethics, and the impartial application of tax law.

SEC. 103. The Internal Revenue Service shall institute and enforce policies and procedures that will safeguard the confidentiality of taxpayer information and protect taxpayers against identity theft.

SEC. 104. Funds made available by this or any other Act to the Internal Revenue Service shall be available for improved facilities and increased staffing to provide sufficient and effective 1-800 help line service for taxpayers. The Commissioner shall continue to make improvements to the Internal Revenue Service 1-800 help line service a priority and allocate resources necessary to enhance the response time to taxpayer communications, particularly with regard to victims of tax-related crimes.

[ SEC. 105. None of the funds made available to the Internal Revenue Service by this Act may be used to make a video unless the Service-Wide Video Editorial Board determines in advance that making the video is appropriate, taking into account the cost, topic, tone, and purpose of the video. ]

SEC. [ 106 ] 105. The Internal Revenue Service shall issue a notice of confirmation of any address change relating to an employer making employment tax payments, and such notice shall be sent to both the employer's former and new address and an officer or employee of the Internal Revenue Service shall give special consideration to an offer-in-compromise from a taxpayer who has been the victim of fraud by a third party payroll tax preparer.

[ SEC. 107. None of the funds made available under this Act may be used by the Internal Revenue Service to target citizens of the United States for exercising any right guaranteed under the First Amendment to the Constitution of the United States. ]

[ SEC. 108. None of the funds made available in this Act may be used by the Internal Revenue Service to target groups for regulatory scrutiny based on their ideological beliefs. ]

[ SEC. 109. None of funds made available by this Act to the Internal Revenue Service shall be obligated or expended on conferences that do not adhere to the procedures, verification processes, documentation requirements, and policies issued by the Chief Financial Officer, Human Capital Office, and Agency-Wide Shared Services as a result of the recommendations in the report published on May 31, 2013, by the Treasury Inspector General for Tax Administration entitled "Review of the August 2010 Small Business/Self-Employed Division's Conference in Anaheim, California" (Reference Number 2013-10-037). ]

[ SEC. 110. None of the funds made available by this Act may be used in contravention of section 6103 of the Internal Revenue Code of 1986 (relating to confidentiality and disclosure of returns and return information). ]

SEC. 106. Section 9503(a) of title 5, United States Code, is amended by striking the clause "before September 30, 2013" and inserting "before September 30, 2020".

SEC. 107. Section 9503(a)(5) of title 5, United States Code, is amended by inserting before the semicolon the following: "renewable for an additional two years, based on a critical organizational need". (Department of the Treasury Appropriations Act, 2015.)

 

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