The House Appropriations Committee has advanced the fiscal year 2027 Financial Services and General Government (FSGG) funding bill, which would provide the IRS with $10.2 billion and the SEC with $2 billion. The measure, approved in a 34-to-28 vote, includes a nearly $1.4 billion cut to IRS enforcement funding. The move tees the funding bill up for House floor consideration next.
IRS Enforcement Budget Slashed
House Republicans proposed to reduce the IRS’ enforcement budget for fiscal year 2027 to $3.6 billion from nearly $5 billion in the prior year. The Trump administration also proposed a cut, but not as steep — it called for $4.1 billion for enforcement.
The GOP bill’s sharp reduction in enforcement funding was a major point of contention during the committee markup. FSGG Appropriations Subcommittee Ranking Member Steny Hoyer (D-MD) offered an amendment — that ultimately failed — but would have increased the enforcement budget by $1.8 billion. Hoyer argued that starving the agency of enforcement funding is fiscally irresponsible, comparing it to a business that does not collect its accounts receivable. Cutting IRS funding “has a very real fiscal cost,” he said.
Other Democrats supported Hoyer’s amendment, arguing that cuts to IRS enforcement would ultimately increase the national deficit. Appropriations Committee Ranking Member Rosa DeLauro (D-CT) cited a Yale Budget Lab report that found “IRS reductions from funding and layoffs have likely resulted in about $861 billion in decreased revenue.” But DeLauro stressed that it’s not just about how to efficiently raise revenue. “It is about really right and wrong,” she said, adding “it’s wrong to allow the richest Americans to get away with not paying what they owe.”
FSGG Subcommittee Chair Dave Joyce (R-OH) led the opposition to the amendment, arguing that the focus should be on improving taxpayer assistance. “We want to help taxpayers on the front end — answer their questions, help them understand why they need to file with the IRS — rather than bog them down an unnecessary audit or, worse yet, enforcement action,” Joyce said. He also noted the bill gives the IRS broad authority to use remaining funds from the Inflation Reduction Act to support its activities.
Taxpayer Services Flat, Technology Funding Boosted
Other IRS funding provisions were less drastic — and less controversial. The bill would maintain the fiscal ’26 funding level for taxpayer services at nearly $3.04 billion. The Trump administration had requested a slight bump to $3.13 billion for taxpayer services.
For Technology and Operations, House Republicans seek $3.6 billion for fiscal ’27, a $445 million boost over fiscal ’26 levels. The Trump administration, however, had requested just $2.6 billion for technology and operations.
Bill Reflects GOP Priorities for IRS
Joyce described the bill as “cutting wasteful spending by leveraging new technologies and rooting out waste, fraud, abuse, and other improper payments across the government.”
It “restores discipline to federal spending, eliminates waste, and ensures taxpayer dollars are focused where they matter most,” according to Appropriations Committee Chair Tom Cole (R-OK). “Line by line, appropriations are mission-focused and guided by purpose, not bureaucracy,” he added.
In addition to blocking Hoyer’s proposed increase in enforcement funding, the committee rejected several other Democrat-backed amendments. Those include an amendment offered by Representative Mark Pocan (D-WI) that would have prohibited funds from being used to settle litigation or pay a settlement to a sitting president.
Another amendment proposed by Representative Marie Glusenkamp Perez (D-WA) would have stricken a rider prohibiting the IRS from further work on a free, public electronic tax return filing service, such as Direct File.
A Cut to SEC Funding, But Fewer Riders
The bill approved by the House Appropriations Committee would provide the SEC with $2.026 billion for fiscal year 2027. That is down from the agency’s current-year appropriation of $2.149 billion, but still above the $1.908 billion the commission requested in its own fiscal 2027 congressional budget justification. The SEC’s funding is offset by transaction fees, leaving the appropriation deficit neutral.
The Commission’s own budget blueprint, released earlier this month, reflects a smaller workforce and shifting regulatory priorities under Chairman Paul Atkins. In that request, the SEC indicated it expected to absorb much of the reduction through a smaller workforce, use of unobligated prior-year balances, and recoveries of prior-year obligations. The House measure would instead give the commission a somewhat larger cushion, while still requiring it to operate below its fiscal 2026 enacted level.
The committee-backed bill also omits a rider that House appropriators had used in prior years to pressure the FASB over its 2023 income tax disclosure update in Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Missing this time is language that would have applied pressure on the FASB’s budget process to withdraw the rule, which expanded disclosures on rate reconciliation and income taxes paid. But the committee did not completely drop the issue: accompanying report language restates prior criticism of the update and directs the SEC to brief appropriators on the rule’s regulatory impact and recommend ways it could be revised to ease burdens on filers.
Among the SEC riders that did survive committee approval are a longstanding prohibition on using funds to “finalize, issue, or implement any rule, regulation, or order regarding the disclosure of political contributions, contributions to tax exempt organizations, or dues paid to trade associations,” and a separate bar on using funds to finalize, implement, or enforce the commission’s climate-related disclosure rule adopted under former Chair Gary Gensler. The bill also imposes a restriction aimed at the Consolidated Audit Trail (CAT), prohibiting the SEC from using funds to implement any program requiring national securities exchanges, associations, or their members to collect personally identifiable information from retail investors under CAT reporting requirements.
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