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U.S. IRS tax enforcement collection, staffing both down: report

U.S. 1040 Individual Income Tax forms are seen in New York March 18, 2013. REUTERS/Shannon Stapleton
U.S. 1040 Individual Income Tax forms are seen in New York March 18, 2013. REUTERS/Shannon Stapleton

By Patrick Temple-West

WASHINGTON (Reuters) - A decline in tax revenue collected by the U.S. Internal Revenue Service's enforcement arm over the past two years correlated closely with staff cuts, according to a report on Tuesday that comes as Congress considers further IRS budget reductions.

"Some of these trends are cause for concern, especially given that diminished enforcement could also affect voluntary compliance over time," said the Treasury Inspector General for Tax Administration (TIGTA), an internal IRS watchdog.

Revenue from enforcement fell 13 percent over the past two years. Over the same period, the IRS trimmed 14 percent of its enforcement workforce. IRS enforcement agents collected $50.2 billion in fiscal 2012, $55.2 billion in fiscal 2011 and $57.6 billion in fiscal 2010.

In total, the IRS collected more than $2.5 trillion in taxes last year, the vast majority of it through voluntary reporting.

Republicans in the House of Representatives have proposed cutting the IRS budget by 24 percent in fiscal 2014.

President Barack Obama has proposed increasing the agency's budget next year. Fiscal 2014 starts October 1.

In 2012, the IRS examined fewer individual income tax filings for the second straight year, but increased examinations of corporations, S-corporations and partnerships, the TIGTA said.

With fewer agents, the IRS relied more on computer-matching and correspondence audits to find unpaid taxes, the TIGTA added.

(Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh and Andre Grenon)

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