UPDATE 1-IRS would get 5,100 new agents under Obama budget

Mon Feb 14, 2011 4:18pm EST

* Obama's 2012 plan calls for 9.4 pct boost

* New IRS agents seen boosting tax collection by $1.3 bln

* Request sets up clash with Republican plans for IRS cuts (Recasts with increased numbers of IRS agents)

By Kim Dixon

WASHINGTON, Feb 14 (Reuters) - The Internal Revenue Service would get an additional 5,100 agents under President Barack Obama's increased budget request, setting up a clash with Republicans who advocate cuts for the tax collection agency.

Obama's 2012 budget proposal, released on Monday, calls for a $1.13 billion, or 9.4 percent, funding increase for the IRS for fiscal 2012, to $13.28 billion for fiscal 2012. Adding the extra agents would only amount to about a 5 percent increase in manpower to 100,537.

The request includes a $460 million increase for tax enforcement programs such as those targeting offshore tax evasion, over 2010 levels.

The federal government is currently operating on an extension of 2010 funding levels because lawmakers have not agreed to a budget for the remainder of 2011.

The agency's budget will likely get caught up in the political debate over spending now heating up in Congress.

Republicans, who took control of the U.S. House of Representatives in November's congressional elections, view the IRS with suspicion and want to slash millions of dollars from the agency.

Treasury Department officials said the increase in the enforcement budget would result in increased tax collections of about $1.3 billion annually once the new hires reach their full potential in fiscal 2014.

The IRS under Commissioner Douglas Shulman, appointed by former President George W. Bush but kept on by Obama, has beefed up enforcement against tax cheats in recent years, with a focus on high net-worth individuals and the banks that aid them.

The poster child for that effort is Swiss global banking giant UBS AG UBSN.VX (UBS.N), which in the past two years paid $780 million as part of a settlement and has pledged to hand over account information on nearly 5,000 Americans that the bank helped dodge U.S. taxes.

The president's budget is a blueprint or wishlist that starts a debate in Congress, where the actual budget is crafted.

Republicans in the House on Friday announced a plan for deep cuts in spending. [ID:nN11200912] (Additional reporting by David Lawder; Editing by Tim Dobbyn and Sandra Maler)

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