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May 25—House Appropriations Committee releases draft bill with more cuts in IRS funding

On May 24, the House Appropriations Committee released a draft of a spending bill which would cut IRS’s FY 2017 budget by $236 million from the fiscal year 2016 enacted level and which would be $1.3 billion below President Obama’s budget request. The bill provides $10.9 billion for IRS, holding the agency’s budget to below the 2008 level. House lawmakers said this amount provides sufficient resources to perform its core duties. The measure is slated for a markup on May 25.

The bill maintains the current $2.1 billion level for Taxpayer Services. And, on top of this, provides an additional $290 million to improve customer service (e.g., phone call and correspondence response times), fraud prevention, and cybersecurity.

In response to accusations against IRS employees of inappropriate actions, waste of taxpayers’ dollars, and unfair treatment and targeting of certain ideological groups, the bill includes a number of specified prohibitions. The bill provides that no funds can be made available for by IRS to issue, revise, or finalize any regulation, revenue ruling, or other guidance not limited to a particular taxpayer, that relates to the standard which is used to determine whether an organization is operated exclusively for the promotion of social welfare for purposes of (including the proposed regulations published in November of 2013). In addition, funds are prohibited for: bonuses or to rehire former employees unless employee conduct and tax compliance is given consideration; IRS targeting groups for regulatory scrutiny based on their ideological beliefs; IRS targeting individuals for exercising their First Amendment rights; the production of inappropriate videos and conferences; and the White House ordering IRS to determine the tax-exempt status of an organization. The measure also contains a requirement for extensive reporting on IRS spending.

IRS FY 2017 Appropriations Bill.

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