Geithner Wants More Money to Pursue Havens

WASHINGTON (CN) - Treasury Secretary Timothy Geithner requested $13.4 billion from a senate appropriations subcommittee Tuesday for the agency's 2010 budget, in order to hire 800 more IRS workers and pursue offshore tax havens. The request represents a $676 million over the current budget. Geithner said there is no way to get through the economic crisis without substantial borrowing, but, he added, "The force of the storm is weakening."

IRS Commissioner Douglas Shulman testified that increased enforcement was a fundamental component to the government purse. "$2.5 trillion of revenue depends on it," Shulman testified.

"The American people who play by the rules every day expect the IRS to pursue those taxpayers who do not pay their taxes," said Shulman to the Subcommittee on Financial Services and General Government.

The Treasury Department is the parent agency of the IRS.

Of the more than $600 million extra going to the IRS, Geithner said much would go towards expanding IRS enforcement, particularly to support President Barack Obama's pledge to pursue overseas tax havens, but also to protect computerized tax records.

Geithner also explained the need for the rest of the budget, defending the actions of the Treasury in its response to the crisis and noted the importance of the Treasury in drafting a healthcare plan and a cap-and-trade program.

With the extra money, the IRS plans to hire 800 more employees to combat offshore tax evasion.

The agency will also spend $130 million to improve the IRS computer systems, and improve it's detection of fraud.

Maine Republican Sen. Susan Collins noted the need for expanded IRS computer security, in saying the IRS information systems are on the "high-risk list."

"Knock on wood we haven't had any major breaches," Shulman answered.

In addition to knocking on wood, Shulman and Geithner hope to funnel $90 million in improving the IRS computer files security.

In an interview, Susan Helper, a professor of economics at Case Western Reserve University, said investment in the IRS is a good idea, and that it would "increase tax revenues far more than the increased spending."

Illinois Democratic Sen. Richard Durbin, who chairs the subcommittee, told the story of when he got an email from an IRS impostor, asking him to send his information to claim hundreds of dollars in a stimulus check.

But the IRS doesn't send personal emails.

"My friends in Nigeria have ongoing correspondence with me," Durbin joked.

In his request for funds, Geithner also defended the Treasury's recovery efforts.

"There was no path through this crisis that did not involve some temporary increase in borrowing," Geithner said in response to worries over government debt, reminding the subcommittee that "the force of the storm is weakening."

Many senators asked about the closure of car dealerships enacted by General Motors as part of its plan to wind down production. Collins said her understanding was that the dealerships pay for the cars, shipping, and sales people. She said the dealerships don't seem to impose a cost on GM.

Collins asked how GM plans to save money if it has fewer people promoting its product.

"I've never run an automobile company," Geithner replied.

"'Till now," said Collins.

As the hearing drew to a close, Durbin told Geithner that the committee would let him go to either save the American economy or to have lunch.

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