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IRS budget cuts could endanger U.S. tax system-Treasury

WASHINGTON (Reuters) – The Obama administration warned Congress on Tuesday that years of budget cuts to the country’s tax collection agency could create a big fiscal headache.

Congress has slashed the budget for the Internal Revenue Service (IRS) by 10 percent over the last five years, hurting the agency’s operations, said Treasury Secretary Jack Lew.

“A sustained deterioration in taxpayer services combined with reduced enforcement activity could create serious long-term risk for the U.S. tax system,” Lew said in prepared testimony before a Senate subcommittee for budget appropriations.

The administration proposed last month extra funds for the IRS that Lew said would “begin restoring taxpayer services to acceptable levels.”

Lew also urged Congress to approve a 2010 reform of the International Monetary Fund that gives more voice to poor nations but does not reduce America’s vote at the body.

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