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Congress weighs budget cut, videos ban for U.S. IRS

A general view of the Internal Revenue Service (IRS) Building in Washington, May 14, 2013. REUTERS/Jonathan Ernst
A general view of the Internal Revenue Service (IRS) Building in Washington, May 14, 2013. REUTERS/Jonathan Ernst

WASHINGTON (Reuters) - The Internal Revenue Service budget would shrink by about 4 percent and the tax agency would be barred from making "inappropriate videos" under a congressional budget deal agreed to late on Monday.

The proposal to reduce the IRS budget to $11.3 billion and impose new rules on how the agency collects taxes follows a series of scandals last year, including some embarrassing IRS training videos that spoofed the TV show "Star Trek," with one staffer starring as Mr. Spock.

Another part of the proposed $1.1 trillion spending bill, which is widely expected to be approved, is "extensive training" for employees in the IRS's tax-exempt division. It came under heavy fire last year for subjecting some political groups applying for IRS tax-exempt status to extra scrutiny.

The bill also would prohibit the IRS from using its funds to target groups for regulatory scrutiny based on their ideological beliefs, Republican Representative Harold Rogers of Kentucky said in a statement.

Conservative, Tea Party-aligned groups complained last year about their treatment by the IRS in recent years, prompting investigations on Capitol Hill and strong criticism by Republicans.

In his fiscal 2014 budget proposal, President Barack Obama asked for $12.9 billion to fund the IRS, which took on major new duties recently in implementing the president's health care law.

"The IRS's resources are being dangerously pared," said Robert Willens, a noted corporate tax and accounting analyst.

"An enfeebled IRS threatens ... the viability of our self-enforcement tax system," he said.

(Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh)

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