Payroll Savings continue to be the dominant sales activity, accounting for about two-thirds of total sales. More than 2.4 million new and increased savers were enrolled in 1971. INTERNAL REVENUE SERVICE The Revenue Service is requesting a total budget for FY 1973 of $1,163 million, $56.6 million more than authorized for FY 1972. The Service's average manpower under this request would be 75,732, an increase of 2,988 over FY 1972. Within this request, the Service will carry out not only its primary responsibility of administering and enforcing the tax laws, but also its new assignment of administering the President's program for stabilizing the economy and controlling inflation. Just four days after Phase I of the Stabilization Program was announced, the Revenue Service was called on to establish local service and compliance centers in some 360 of its district and local offices around the country. Throughout Phase I, IRS employees at these centers were the public's primary source of information and assurance of compliance with the stabilization guidelines. The IRS is now providing the service and compliance administration of Phase II of the Stabilization Program. It is dispensing information, answering the public's questions, monitoring compliance; processing exemptions and exception requests; and issuing rulings. We estimate that the Phase II program will require about 1,900 man-years and cost about $35.8 million in FY 1972. Assuming a nine month program in FY 1973, we anticipate the IRS resource commitment to be about 2,900 man-years and $40.3 million. Accounts, Collection and Taxpayer Service To form this new appropriation which consolidates related operations and balances the two larger accounts, we included the delinquent accounts and returns activities of the Compliance appropriation. The FY 1973 request is $491,324,000, a net increase of $26,968,000 and 1,298 average positions over the 1972 authorized level. A principal item of this estimate is the request for an increase of 793 average positions (903 positions) and $9,635,000 to collect unpaid taxes, secure delinquent returns, and to assist taxpayers. Other increases are $11,000,000 for data processing equipment and $5,000,000 and 430 average positions to keep abreast of the growing returns processing and accounting workload. The signal feature of this budget request is its concentration on frontline revenue producing programs. Commissioner Walters believes in tight management of resources with an eye to applying the highest possible proportion of resources to direct production. We are aware of the concern of this Committee for the adequacy of the delinquent accounts and returns program, and in line with the Committee's concern and the Service's own realization that something must be done to revitalize the program to identify non-filers, procedural changes were made to free manpower for the returns compliance program. The manpower increase requested, plus the realignment of manpower within the programs, will enable the Service to reduce its delinquent accounts backlog to a more manageable level. A constant aim of the Service is to better use its extensive computer capabilities in promoting taxpayer compliance. Modest additional manpower that would make this possible by means of a mass review of unallowable tax deductions is also part of the 1973 ACTS program. We recognize the intent of the Committee that the IRS make the fullest use of the service centers in improving compliance. Compliance The FY 1973 request is $637,919,000, a net increase of $27,475,000 and 1,651 average positions over the FY 1972 authorized level. In the Compliance area, only the audit program will be expanded under this request. It is no secret that audit coverage has been slipping seriously in recent years to the point of professional tax groups urging corrective action. In FY 1972, we plan to apply 1,342 average positions and $19,206,000 to the audit function to strengthen the capability to fairly administer the tax laws. The remainder of the request for the Compliance appropriation is needed to maintain currently authorized levels of employment in FY 1973, including $6,360,000 to continue the drive against narcotics financiers at the level appropriated in 1972. Salaries and Expenses For FY 1973 the request is $34,212,000, a net increase of $2,202,000 and 39 average positions above the 1972 authorized level. Beyond the funding needed to maintain the 1972 level of employment, the principal increase is $500,000 and 14 average positions as part of the implementation of the Office of Industrial Economics which will assist in the administration of the Asset Depreciation Range System (ADR) for determining depreciation allowances. Basic Functions The The Revenue Service has been called on in recent years with increasing frequency, to assume new programs that represent both Congressional and Presidential initiatives. They have come in law enforcement, with a major commitment to strike forces, guns and explosives controls and now to the narcotics program. Economic Stabilization Program is the newest of its added responsibilities. But we must not lose sight of the fact that the primary task of administering and enforcing the revenue laws continues to place a growing demand on IRS resources, particularly with the number of taxpayers and tax returns ever increasing. This budget request is intended to provide for only the most urgently needed increases for IRS's major tax programs, to permit the Service to keep up its performance in this area while at the same time fulfilling its other commitments. expenses - OFFICE OF THE TREASURER, U.S. The estimate for the Office of the Treasurer of the United States for fiscal year 1973 provides $11,325,000 for operating an increase of $1,683,000 over the proposed authorized level for operating expenses in 1972. It also includes a request for $1,800,000 as an increase in capital for the Check Forgery Insurance Fund. Salaries and Expenses Appropriation This Office is primarily concerned with paying Government checks, reconciling payments to disbursing officer reports of issues, and acting on claims of loss, theft, and forgery of Government checks. The increasing number of claims of loss, theft, and forgery of Government checks continues to be a major problem. These claims are expected to increase from 678 thousand in 1972 to 818 thousand in 1973. Based on anticipated 1972 productivity, increased for expected improvements, the analysis, documentation, and adjudication of these additional claims will require a net addition of 64 average positions of employment in 1973. Without these, the settlement of the claims will have to be delayed, the payees will suffer and their complaints will multiply. This in turn results in more mail that must be handled and consumes time that should be devoted to acting on the claims. Provision is made in this estimate for continuation of the check claims automation program which was started in fiscal year 1972. Selection has been made of the computer and the subsidiary equipment and conversion to the new system is scheduled to begin in May, 1972. When the claims automation program has been fully implemented, the Treasurer's Office will be able to provide more prompt and efficient service to the public and will be able to reduce future personnel requirements. Personnel levels for all other activities of the Treasurer's Office are being held to those of 1972 despite increased workloads and service demands. Check Forgery Insurance Fund The present level of $200,000 of this revolving fund permits settlement of claims, in advance of recovery from endorsers, only where hardship is made known in the early stages of the case. The requested increase in capital of $1,800,000 will enable the Treasurer to improve service to the public by making settlement in many cases immediately after receiving the affidavit of forgery from the payee. This will reduce appreciably the number of follow-up inquiries received from claimants and their Congressional representatives which require time consuming research and responses. U. S. SECRET SERVICE The appropriation request for the U.S. Secret Service for the fiscal year 1973 totals $60,800,000, an increase of $3,856,000 over the authorized level for the fiscal year 1972. No additional positions are being requested; however, funds are required for the maintenance of current employment levels including the full year cost of the additional positions authorized on a part year basis in the fiscal year 1972. Executive Protective Service The Executive Protective Service was fully staffed during the latter part of fiscal year 1971. Recent statistics from the Metropolitan Police Department indicate a drop in crime in the areas surrounding foreign missions that are patrolled by the Service. Moreover, many letters of commendation have been received from the Diplomatic Corps and the citizens of Washington, D.C., praising the presence, demeanor, and effectiveness of the relatively new Service. For the fiscal year 1973 no additional positions or funds are being requested other than the amounts required to maintain operations at current levels. Candidate and Nominee Protection In order to implement Public Law 90-331 which provides for the protection of major presidential candidates and nominees, the Secret Service is requesting funds to cover the additional travel and miscellaneous expenses related to the campaign and national conventions that are expected to be incurred in the first half of the fiscal year 1973. The third and final increment of staffing for this responsibility was appropriated in FY 1972. During the three years of augmentation for candidate and nominee protection, no additional agents have been requested for criminal investigation in the field since it is the plan of the Service to utilize the additional agents in intervening periods to combat the mounting criminal investigation workloads in counterfeiting, forgery and other areas. Counterfeiting Counterfeiting activity continued to increase during the fiscal year 1971. Despite the record seizures of $23,356,008 in counterfeit notes before circulation in the fiscal year 1971, up substantially from the $16,309,464 seized in the fiscal year 1970, losses to the public increased from $2,190,885 in the fiscal year 1970 to $3,488,159 in the fiscal year 1971. The large number of notes seized before distribution is indicative of the potential losses possible without vigorous enforcement. The success of the Service's effort in this regard is reflected in the 1,766 arrests for counterfeiting in the fiscal year 1971, an increase of 27 percent over the 1,390 arrests in the previous fiscal year. For the first six months of the current fiscal year arrests total 1,132, an increase of 47 percent over the comparable period in the fiscal year 1971. Forgeries of Government Checks and Bonds The forgery of Government checks continues to be a major enforcement problem of the Secret Service. The 66,004 check cases received for investigation in the fiscal year 1971 is an increase of approximately 6 percent over the 62,094 cases received in the fiscal year 1970. During this same period of time, the number of Government checks issued increased only 2 percent. The disproportionate increase in check cases to checks issued indicates the continuing need for a substantial investigative effort, particularly involving the criminal groups handling large numbers of checks, who, if not controlled would undoubtedly result in serious financial losses to businessmen and the general public. Continuing the upward trend of recent years, bond forgery cases for the fiscal year 1971 totalled 22,991, up significantly from the 16,983 cases received in the fiscal year 1970. These statistics indicate that Government savings bonds and notes, which previously were ignored by burglars, are now becoming prime targets due probably to the increased activities regarding the fencing and illegal redemption of bonds. Foreign Dignitary Protection Under the provisions of Public Law 91-651 approved January 5, 1971, the Secret Service is required to "protect the person of a visiting head of a foreign state or government and, at the direction of the President, other distinguished foreign visitors to the United States and official representatives of the United States performing special missions abroad." You will recall that we asked no new positions or increased funding in FY 1972. For the fiscal year 1973, no new positions are being requested but experience now indicates that additional funds are needed to cover the travel expenses which result from this protective responsibility. |