With the Inflation Reduction Act’s $80 billion in funding, the IRS faces back from Congress by around 25%.
In the latest debt ceiling agreement, President Joe Biden made a significant IRS compromise.
IRS Faces Challenges Amidst Funding Reductions
President Joe Biden consented to redirect 10 billion in 2024 and another $10 billion in 2025 of the IRS’s windfall to other expenditure priorities.
In addition, $1.4 billion more was reduced. This means that instead of $80 billion over 10 years, the IRS will now receive close to $59 billion for enforcement, modernization, etc. It’s unclear how this will impact the IRS’s present and upcoming operations.
According to a Treasury official, the IRS’s plans for the upcoming years won’t be much altered by this financial reduction, but it is possible that the IRS will approach Congress again in around six years to request additional monies.
But what’s to stop Republican lawmakers from calling for even more financial reductions for the IRS? The new financing for the IRS has been derided by Republicans in the House and Senate ever since it was passed in August 2022.
In fact, the cancellation of the majority of the IRS’s $80 billion windfall was the first legislation to pass the House when the GOP seized power in January.
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Expectations For Agency’s Operations Remain Unchanged
The Senate killed that bill. Regarding the IRS, the debt ceiling agreement fell short of Republicans’ expectations.
But anticipate further persistence from them. Their voters will chew them up if they criticize the IRS.
What will prevent President Joe Biden — or the subsequent president — from making further accommodations with regard to IRS funding? Many tax experts believed that Joe Biden would not consent to altering the funding for the IRS in the debt ceiling agreement, but they were incorrect.
The IRS is currently expected to continue on its current track, but only time will tell what the actual effects will be.
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