The Internal Revenue Service Commissioner said Thursday that budget cuts proposed by Republicans would have "potentially devastating" impact on the nation's tax system, including a drop in enforcement revenue by $4 billion for the rest of this year.
The Republican-led U.S. House of Representatives passed a bill earlier this year to cut about $600 million from the IRS budget for the rest of 2011.
I.R.S. Commissioner Douglas Shulman said the cuts would lead to drops in customer service, processing and enforcement.
A major part of the agency's recent enforcement efforts involve going after wealthy tax cheats. The IRS is now combing through about 18,000 new returns from those who took part in a tax amnesty program for undeclared assets held abroad.
Republicans at the hearing focused on the impact of the tax code's complexity on business and individual taxpayers, the stated purpose of the hearing.
"Too often we all forget the enormous price in both time and dollars that the individual taxpayer has to pay to comply with the tax filing requirement," said Charles Boustany, the Republican chairman of the subcommittee holding the hearing.
The audit rate for businesses with assets below $10 million is less than 1 percent and for companies with more than $250 million in assets, about 23 percent of businesses are audited, Shulman said.
The biggest companies generally have IRS auditors on site throughout the year.
The IRS collects most of the government's revenue, about $2.3 trillion in 2009. Shulman also said the agency's enforcement role contributes to cutting the federal deficit.
"Our budget more than pays for itself and directly contributes to deficit reduction," he said.