Summary: The Internal Revenue Service's (IRS) budget request for fiscal year 1994 entails $7.4 billion and 116,060 full-time staff--an increase of almost $284 million and 792 positions over fiscal year 1993 levels. GAO questions the appropriateness of more than half of the requested increase for Tax Systems Modernization because it is earmarked for implementing a project for which critical plans have not been completed. Although GAO generally supports the direction IRS appears to be taking with many of the compliance initiatives, inadequate funding of its base operations could prevent IRS from delivering on those initiatives. The goals of some compliance initiatives could be met more efficiently without a further staff increase. The budget request provides for a slight increase in audit coverage, but this increase will not materialize unless IRS realizes productivity savings. Tax law changes in 1993 could boost IRS' taxpayer service work load and worsen existing difficulties in meeting taxpayer demand for telephone assistance. GAO also discusses opportunities for IRS to become more efficient.
