Could a Difference in IRS Funding Lead to a Shutdown?

U.S. Office of Management and Budget (OMB) Director Shalanda Young emphasized on Friday that the Biden administration would not accept any additional cuts in its proposed funding for the Internal Revenue Service (IRS) — a position that many House Republicans are strongly committed to.

If the impasse over the IRS funding continues, there is a possibility of a government shutdown when the current Continuing Resolution expires at the end of the month.

“As part of the budget deal, we agreed to allow the appropriators to rescind $20 billion from IRS funding,” Young stated at a press breakfast in Washington, D.C., hosted by the Christian Science Monitor, “So in our view, $20 billion over 2 or 1 years is $20 billion. We have already worked with the IRS to see that this does not impact on their current efforts.”

The budget chief expressed confidence that the IRS “can continue to go after high income tax cheats with a $20 billion reduction to the $78 billion they received as part of the Inflation Reduction Act.”

In the negotiations with chairmen of House Appropriations subcommittees, Young strongly emphasized: “We have to stop at 20 [billion dollars in cuts]. That is a necessity to ensure we continue to undertake what I think is a game changing opportunity to look at the top 1 or 2 percent [the richest Americans] in this country who do not pay what they owe because they know IRS is so understaffed that they can cheat the system and no one will ever come knocking at their door. The president is committed to this. That’s why it was in the Inflation Reduction Act. And $20 billion was the deal”

Young stopped short of predicting a shutdown over IRS funding, saying “[w]e’re trying to get through the next few weeks. If $20 billion from the IRS is a way to ensure that appropriators can work, then yes. But that does not mean we are giving more of IRS [funding] in 2025. People should not have that assumption because we are committed to making sure this program is not just a short term thing. It will prove itself and have real deficit reduction. If people are serious about debt reduction, then why would you cut something that conservatively is $1 spent for $2 coming in. Some say it’s closer to 8-to-1 or 9-to-1.

“So these are the conversations that, rather than cutting Head Start, we need to do to be serious about our deficit.”

Under the current Continuing Resolution, government agencies and programs are funded by four appropriations bills through Jan. 19 and eight appropriations bills through Feb. 2.