Earlier in the week, congressional Republicans and the White House announced that they have struck a deal on the debt ceiling to avoid national default. As part of the bargain, those at the IRS who were preparing for a gigantic cash infusion may want to see if their new desks can be returned to the store.
CNBC reports, “A tentative deal to raise the debt ceiling limit includes up to $21.4 billion of IRS budget cuts, slashing part of the nearly $80 billion in agency funding enacted last August to boost taxpayer service, technology and enforcement.
The bipartisan bill, released by House Speaker Kevin McCarthy and President Joe Biden on Sunday, rescinds nearly $1.4 billion of the money allocated to the IRS. If unchanged, a separate deal would also repurpose $20 billion of IRS funding for fiscal years 2024 and 2025, according to the White House.
Since the original $80 billion in IRS funding was for a 10-year period, White House officials on Sunday said they don’t expect the budget cuts to fundamentally change the agency’s near-term plans. But the IRS may need to request more funding during the latter years of the original timeline, they said.
If finalized, the IRS budget cuts would mean the additional agency funding runs out faster, according to Alex Muresianu, a policy analyst at the Tax Foundation.
“But the IRS still has a very large funding increase relative to the baseline,” he said. “So it’s not like we’re turning back the clock.”
Last year, while they still controlled all of Congress, Democrats passed a laughably large budget add-on for the IRS worth nearly $80 billion, claiming that the new money would be used to audit rich people.
New Conservative Postnoted, “Reality-based critics, however, understood that Democrats often talk out of both sides of their mouths. Stephen Moore and Steve Forbes explained: “Most of the money raised from these audits won’t come from the superrich or multibillion-dollar corporations — both well-stocked with accountants and tax attorneys to fight IRS allegations.
Moreover, Syracuse University’s Transactional Records Access Clearinghouse (TRAC) released data provided to it by the Internal Revenue Service (IRS) on audits performed by the agency in fiscal year 2022. Despite the infusion of new funding earmarked for the IRS via last year’s Inflation Reduction Act, the agency continued historic trends of hassling primarily low-income taxpayers, with relatively few millionaires and billionaires getting caught up in the audit sweep.
‘The taxpayer class with unbelievably high audit rates—five and a half times virtually everyone else—were low-income wage-earners taking the earned income tax credit.'”