Deplorable:
Congress revoked an additional $20 billion from the Internal Revenue Service last week when lawmakers averted a government shutdown, a cut that may undo many of President Joe Biden’s efforts to improve customer service at the tax agency and train fresh scrutiny on wealthy tax cheats.
Biden and congressional Democrats gave the IRS $80 billion in the 2022 Inflation Reduction Act, but Congress rescinded $20 billion as part of a 2023 budget deal. Shortly afterward, Republicans vowed they’d be back for more IRS cuts.
And because of the way lawmakers extended government funding into March, an additional $20 billion in cuts came automatically.
When Congress approved a stopgap funding bill, called a continuing resolution, all the existing policy from the previous fiscal year was carried forward unless new text was specifically added to the bill to change it. There was no language in the bill to undo last year’s cut, so it repeated in the new law.
Critics of the IRS were pleased.
“We obviously think the increased money from the [Inflation Reduction Act] for IRS agents was a declared shakedown on taxpayers to pay for Democrats’ spending,” said Michael Palicz, director of tax policy for the anti-tax group Americans for Tax Reform. “Republicans have taken a huge chunk out of this before, and we have a chance to do that again.”
But Biden administration officials said the additional cuts would add $140 billion to the national debt over the next decade by hamstringing the agency’s ability to audit wealthy individuals and large corporations.
The agency will conduct 400 fewer audits of major businesses each year, Biden administration officials said, and 1,200 fewer audits of high-income individuals.
More cuts would also force the IRS to dramatically reduce customer service for taxpayers, Deputy Treasury Secretary Wally Adeyemo said last month. By 2026, the IRS would have enough resources to answer only two of every 10 phone calls to customer helplines, and wait times would increase to 28 minutes on average.
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“Not only would you be in a position where we don’t have the money to go after the people who are trying to deliberately cheat and not pay their taxes, but we also wouldn’t have the resources to help the people who are trying to pay their taxes and make it more efficient,” Adeyemo said.
The new money from the Inflation Reduction Act funding vastly improved the IRS’s operations, according to the agency’s inspector general. Before the additional resources kicked in, the agency had a mountain of 24 million backlogged paper tax returns; within a year of receiving the funding boost, that was almost eradicated, the agency reported.
In the 2022 filing season, months before Congress approved the law, only 10 percent of taxpayer phone calls were ever connected to a live representative — if callers stayed on the line through sometimes hours-long waits. The IRS now answers more than 85 percent of taxpayer calls with a wait of less than three minutes, Adeyemo said.
Congress revoked an additional $20 billion from the Internal Revenue Service last week when lawmakers averted a government shutdown, a cut that may undo many of President Joe Biden’s efforts to improve customer service at the tax agency and train fresh scrutiny on wealthy tax cheats.
Biden and congressional Democrats gave the IRS $80 billion in the 2022 Inflation Reduction Act, but Congress rescinded $20 billion as part of a 2023 budget deal. Shortly afterward, Republicans vowed they’d be back for more IRS cuts.
And because of the way lawmakers extended government funding into March, an additional $20 billion in cuts came automatically.
When Congress approved a stopgap funding bill, called a continuing resolution, all the existing policy from the previous fiscal year was carried forward unless new text was specifically added to the bill to change it. There was no language in the bill to undo last year’s cut, so it repeated in the new law.
Critics of the IRS were pleased.
“We obviously think the increased money from the [Inflation Reduction Act] for IRS agents was a declared shakedown on taxpayers to pay for Democrats’ spending,” said Michael Palicz, director of tax policy for the anti-tax group Americans for Tax Reform. “Republicans have taken a huge chunk out of this before, and we have a chance to do that again.”
But Biden administration officials said the additional cuts would add $140 billion to the national debt over the next decade by hamstringing the agency’s ability to audit wealthy individuals and large corporations.
The agency will conduct 400 fewer audits of major businesses each year, Biden administration officials said, and 1,200 fewer audits of high-income individuals.
More cuts would also force the IRS to dramatically reduce customer service for taxpayers, Deputy Treasury Secretary Wally Adeyemo said last month. By 2026, the IRS would have enough resources to answer only two of every 10 phone calls to customer helplines, and wait times would increase to 28 minutes on average.
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“Not only would you be in a position where we don’t have the money to go after the people who are trying to deliberately cheat and not pay their taxes, but we also wouldn’t have the resources to help the people who are trying to pay their taxes and make it more efficient,” Adeyemo said.
The new money from the Inflation Reduction Act funding vastly improved the IRS’s operations, according to the agency’s inspector general. Before the additional resources kicked in, the agency had a mountain of 24 million backlogged paper tax returns; within a year of receiving the funding boost, that was almost eradicated, the agency reported.
In the 2022 filing season, months before Congress approved the law, only 10 percent of taxpayer phone calls were ever connected to a live representative — if callers stayed on the line through sometimes hours-long waits. The IRS now answers more than 85 percent of taxpayer calls with a wait of less than three minutes, Adeyemo said.
