Direct program funding - Behind the Scenes - Brief Article

Statistics of Income Bulletin, Spring, 2002

Each year, we report on the approved SOI budget for the current year, in this case, Fiscal Year (FY) 2002. This time, we are able to publish this information somewhat earlier than in the past, in the spring instead of in the summer issue of the Bulletin. At first glance, even this publication date could appear to be late, since spring 2002 is well into the fiscal year. There are two reasons for this. The first is the budget process itself. Federal budgets typically are not finally approved until after the fiscal year begins. The second is the date the budget is approved, relative to the date the quarterly Bulletin is released.

Our approved estimated budget for FY 2002 was originally $30.9 million (excluding ADP costs). However, the estimate for FY 2002 has since been revised upward to $37.5 million to include ADP costs. The comparable amount for FY 2001 was $31.1 million. As the fiscal year progresses, this amount is likely to be revised again, as IRS adjusts and reallocates funds for its component functions in order to stay within budget limits for the agency as a whole. As things now stand, the most recent estimate for FY 2002 is 14.0 percent more than for FY 2001. However, even after all adjustments are made, the SOI budget will continue to be less than 0.5 percent of the total IRS budget.

As in previous years, most of the FY 2002 budget funds SOI's annual statistical programs on individual, corporation, partnership, tax-exempt organization, and estate tax returns, as well as studies comprising the international taxation program, plus special studies required by Treasury's Office of Tax Analysis. The main purpose of the budget increase for FY 2002 is to fund continued acquisition and installation of computer hardware that will enable SOI to load files online and thus facilitate year-to-year analyses of individual income tax return data for tax policymakers. Other funding will be used for an ongoing study of foreign partnerships controlled by U.S. corporations and partnerships whose tax returns were included in the Statistics of Income samples for Tax Year 2000. Finally, the budget increase reflects part of the continuing effort by SOI to expand data available for electronic dissemination through the IRS Internet home page.

About 40 percent of the 486 full-time employee equivalents (FTE's) allocated to SOI are for use in the National Office here in Washington. The National Office Statistics of Income Division determines the various SOI projects after consulting with Treasury's Office of Tax Analysis and other major users, designs the samples to be used, and oversees and participates in the field statistical processing necessary to accomplish them. SOI then compiles and reviews the data and releases or publishes the results.

The other 60 percent is for work performed by 295 FTE's in the IRS Submission Processing Centers, especially the Ogden (Utah) Center, and, to a far lesser extent, by the IRS Computing Center in Detroit, Michigan. The Submission Processing Centers sample returns and conduct almost all of their statistical processing and testing.