Congress is looking to make its first cut to the Internal Revenue Service’s multi-year modernization funds — as part of a bipartisan deal made last year.
Lawmakers, in the second and final round of government spending bills for the rest of fiscal 2024, plan to cut $10 billion in funds the IRS got in the Inflation Reduction Act to rebuild its workforce and modernize its legacy IT.
The spending bill specifically directs the cuts to come from IRS enforcement funding.
Congress is expected to rescind another $10 billion in IRS funding as part of next year’s appropriations package — giving the agency roughly $60 billion to meet its modernization goals.
The Biden administration agreed to these IRS cuts, as part of a deal with congressional Republicans last year to raise the debt ceiling and avoid an unprecedented default on the federal government’s debts.
White House officials told reporters last May that under this deal, Congress would repurpose about $10 billion of the IRS funding as part of the FY 2024 appropriations process, and repurpose another $10 billion in FY 2025 for other non-defense priorities.
Despite approving this deal, the Biden administration is asking Congress to reverse the $20 billion cut to IRS funding, as part of its 2025 budget request.
Congress plans to keep the IRS at current funding levels for the rest of the year with a $12.3 billion annual budget for its day-to-day operations. The Biden administration also proposed keeping the IRS annual budget flat in its 2025 spending proposal.
Sen. Chris Van Hollen (D-Md.) said in a press release Thursday that the spending deal gives the IRS the funding it needs to keep improving customer service, replace outdated computer systems and crack down on tax cheats.
“This bipartisan legislation invests in these critical priorities for our nation and more,” Van Hollen said.
The IRS has used its Inflation Reduction Act funding to grow its workforce to 90,000 employees for the first time in a decade.
Reuters recently reported the agency plans on reaching a 100,000-employee workforce within the next three years.
Lawmakers in the 2024 spending deal are directing the IRS to prioritize hiring that’ll provide “sufficient and effective 1–800 help line service for taxpayers.”
“The [IRS] Commissioner shall continue to make improvements to the Internal Revenue Service 1–800 help line service a priority and allocate resources necessary to enhance the response time to taxpayer communications, particularly with regard to victims of tax-related crimes,” the spending bill states.
The legislation also gives the Treasury Department direct hire authority to fill positions to process backlogged tax returns and correspondence.
The spending bill, however, bars the IRS from using its funding “to make a payment to any employee under a bonus, award, or recognition program,” or rehire former IRS employees who are delinquent on their tax obligations.
Congress is also requiring IRS to maintain an employee training program that covers “taxpayers’ rights, dealing courteously with taxpayers, cross-cultural relations, ethics, and the impartial application of tax law.”
The spending bill requires the IRS to give the House and Senate appropriations committees and the Government Accountability Office quarterly updates on its major information technology investments.
Congress wary on USPS network changes, seeks updates on mail theft
Congress is also prohibiting the mostly self-funded Postal Service from closing or consolidating small or rural post offices as part of its ongoing network modernization plans.
Lawmakers are sending a cautionary message to USPS in the appropriations bill, as the agency continues a major shakeup of its delivery network.
That shakeup includes USPS opening more Sorting & Delivery Centers across the country…
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