GOP witness: IRS understaffed for health law tax enforcement

The federal government's Internal Revenue Service has too few employees to be able to implement the healthcare reform law's tax penalties on employers who don't offer insurance, a Republican witness testified Wednesday.

"There are consequences to having that tax passed, and No. 1 would be whether the IRS has the resources to be able to enforce it," tax accountant Leonard Steinberg testified on behalf of the Small Business and Entrepreneurship Council. "Right now the IRS is operating razor thin, as it is, with their budget.

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"They don't have the resources to enforce current tax law; how are they going to have the resources to enforce additional mandates that are being passed through the Affordable Care Act?" Steinberg said.

Steinberg was responding to a question about the healthcare reform law's employer mandate during a Small Business Committee hearing on "The tax outlook for small businesses: What's on the horizon?" The penalty only applies to companies with more than 50 employees, starting in 2014.

Republicans typically argue that the healthcare law will create too many bureaucrats, not too few. On Tuesday, Republicans on the Joint Economic Committee said employment at the Health and Human Services Department has increased by 11 percent under President Obama.

And Republicans are demanding to know what the tax agency is doing with the $500 million HHS has transferred to it over the past two years. The IRS says it wants to hire more than 300 new employees next year to cover tax changes under the healthcare reform law, such as the new fees on drug companies and insurance policies.

The IRS did not immediately respond to a return for comment.