By law, the oversight board's report goes to Congress along with the administration's budget proposal. The nine-member board, which includes six members from the private sector, was established by the 1998 IRS Restructuring and Reform Act. The board oversees agency operations, recommends candidates to be IRS commissioners and advises the President when it feels a commissioner should be fired. The group is required to report annually to the President and Congress on its findings and recommendations. During its first public meeting in March, the board said the agency needs a fiscal 2002 budget of more than $10 billion to sustain its modernization effort, increase compliance rates and improve customer service. Witnesses and board members voiced concern over the agency's antiquated business systems, a decline in tax audits during fiscal 2000 and staff shortages. The report also recommended $54 million to upgrade desktop and laptop computers to support new software. The President's budget does not include any funding for this program. National Treasury Employees Union President Colleen M. Kelley said the administration's budget is damaging to IRS employees. "Just as we feared, the administration's proposal shortchanges both the IRS and its employees, at the same time that extraordinary and changing demands are being placed on both," said Kelley. During the 1990s, staffing levels at the IRS dropped by 17,000 employees, while the number of tax returns grew by 8 percent. The board proposed fully funding the Staffing Tax Administration for Balance and Equity program, which would enable the IRS to hire about 3,800 new employees to improve service and enforcement. Bush's budget slows the program down in 2002, providing for only 2,500 new employees. Kelley said the power to boost funding for the IRS now lies with Congress. "We will find out in the appropriations process how serious Congress is about remaking the IRS," said Kelley.
In December, leaders of appropriations committees on Capitol Hill agreed to release $200 million to help the agency complete its modernization program.