IRS Sees $2.4 Billion in Return for Budget Hike

The Internal Revenue Service asked Congress on Wednesday for a $383-million increase in its budget and promised to bring the government an additional $2.4 billion in return.

Testifying before a House Appropriations subcommittee, Commissioner Lawrence B. Gibbs pledged to raise employees’ sensitivity to taxpayer problems, increase the percentage of tax returns that are audited and investigate allegations that tax-exempt groups financed military operations in foreign countries.

“We are getting into some of the issues the Tower report raises” about activities of some tax-exempt organizations, Gibbs said. “At the appropriate time and in the appropriate way we will disclose the results of those investigations.”

The IRS is barred by law from disclosing details of continuing investigations. But Gibbs said he has read the report of the Tower Commission, which President Reagan appointed to look into the Iran- contra affair, “and I am concerned.”

The report found evidence that some tax-exempt organizations have supplied arms to rebels fighting the Nicaraguan government.

The proposed budget is about $383 million more than the present budget, assuming that Congress approves a supplemental appropriation the IRS has asked for this year. It would use the increase this way:

--Spend $226 million to audit more returns. A lower percentage of returns--about 12 per 1,000--is now audited than ever before.

--Spend $122 million for increased collection efforts, raising $1.13 billion.

--Spend $35 million for stepping up the successful program in which individual tax returns are computer-matched against reports from banks and other institutions.