(AP) The Internal Revenue Service needs more money to collect some of the estimated $311 billion a year in unpaid taxes and to counter taxpayers' growing acceptance of cheating, agency overseers said Tuesday.

While other analysts have reached the same conclusions before, the report by the IRS Oversight Board - three of whose seven members were appointed by President Bush - added weight to those arguing the agency lacks the funds it needs to enforce tax laws.

"The IRS needs more resources; there is no way around this simple fact," the report said.

The board said the IRS is making overall progress, especially in improving the help it provides to taxpayers.

But the report declared it "deeply troubling" that a survey last year showed 81 percent of taxpayers say it is unacceptable to cheat on taxes, down from 87 percent in 1999.

Reflecting that attitude and the increasing intricacy of the tax system, Americans did not pay $311 billion in owed taxes last year, the board wrote, citing a 2003 report by the Taxpayer Advocate Service, an IRS organization. The government collected $1.8 trillion in revenue.

"We must stem this tide," the board wrote." Not to do so would place the entire tax administration system in peril."

The report said the number of IRS enforcement workers has dropped by 36 percent since 1996, from 25,000 to 16,000, even as the number and complexity of tax returns grew.

The board also said that while the percentage of audits for individual taxpayers edged up last year, it dropped for businesses.

Seven of every 1,000 corporations had face-to-face audits with IRS examiners in 2003, compared with 15 of every 1,000 five years earlier, the report said. The board got the figures from the Transactional Records Access Clearinghouse, a data research organization affiliated with Syracuse University.

"Enforcement continues to be a serious and ongoing problem that threatens the very integrity of our tax administration system," the report said.

The report came four days after the Bush administration projected this year's federal deficit would hit $445 billion, the largest budget gap ever in dollar terms.

It also comes during a year in which the Republican-run Congress has taken a preliminary step to give President Bush less than he wants for IRS enforcement.

While President Bush has asked Congress to increase that amount from $4.2 billion this year to $4.6 billion next year, the House Appropriations Committee has voted to limit the increase to $4.3 billion. The Senate has not yet written its version of the bill.

President Bush wants to increase this year's IRS budget of $10.2 billion to $10.7 billion next year.

The board did not say how much extra money it thinks the IRS should get.

The report also complained that President Bush and the Senate - which must confirm his choices - are not moving fast enough to fill board vacancies.

By law, the nine-member board includes Treasury Secretary John Snow and IRS Commissioner Mark Everson.

Of the seven public positions, two are vacant and the terms of the five current public members will expire this September and next.

"Without enough members, the board cannot operate properly," the report said.

Congress established the board by a 1998 law at a time when lawmakers were criticizing the IRS for bullying taxpayers and not providing them with enough help.

By Alan Fram İMMIV The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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