IRS May Lose Access to $20 Billion in Tax Enforcement Funds
In September’s continuing resolution (CR) that keeps the government funded through December, a budgetary anomaly inadvertently duplicates a previous cut. The Internal Revenue Service (IRS) faces a $20 billion funding gap for its tax enforcement activities due to this legislative anomaly. Treasury officials described it as linked to a prior budget deal. Treasury Deputy Secretary Wally Adeyemo highlighted on a Nov. 26 call with reporters that the September stopgap funding bill duplicated a one-time $20 billion cut to IRS enforcement funding previously agreed upon in bipartisan negotiations. Adeyemo urged lawmakers to reverse the inadvertent cut to unlock the frozen funds, warning of consequences such as fewer audits of wealthy individuals and large corporations, a hiring freeze at the IRS, and an increase in the national deficit by $140 billion. If the $20 billion is not restored, the IRS would run out of enforcement money by fiscal year 2025. Maya MacGuineas, president of Committee for a Responsible Federal Budget (CRFB), emphasized the negative impact of cutting enforcement funding on the federal deficit and the national debt, which recently hit $36 trillion.
The IRS initially received $80 billion under the 2022 Inflation Reduction Act for enforcement capabilities, technology modernization, and taxpayer services. However, a budgetary anomaly in the September CR inadvertently duplicated a $20 billion cut from earlier agreements, potentially leading to a second $20 billion cut unless addressed in a comprehensive spending deal or another continuing resolution.
