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Federal Tax

IRS Funding Cuts Accelerated in FY 2024 $1.6T Spending Deal

Tim Shaw  

· 5 minute read

Tim Shaw  

· 5 minute read

Previously agreed upon cuts from the IRS’ Inflation Reduction Act (PL 117-169) funds across fiscal years 2024 and 2025 would be front-loaded as part of a bipartisan, bicameral agreement between congressional lawmakers reached over the weekend that sets a spending topline for fiscal 2024 appropriations.

Congress is tasked with taking action before a January 19 partial government shutdown deadline, and a February 2 full shutdown deadline. Agencies impacted by the earlier date include the departments of Agriculture, Transportation, Energy, Veterans Affairs, and Health and Human Services.

According to a January 7 letter from House Speaker Mike Johnson (R-LA), the $1.590 trillion topline for the fiscal year ending September 30 includes $886 billion for defense and $704 billion for nondefense. “The agreement today achieves key modifications to the June framework that will secure more than $16 billion in additional spending cuts to offset the discretionary spending levels,” wrote Johnson.

That framework refers to debt ceiling negotiations between Republicans, Democrats, and the Biden administration. Last summer, Biden and then-Speaker Mike McCarthy struck a hand-shake deal to redirect portions of the once-$80 billion appropriation to the IRS under the Inflation Reduction Act beyond the $1.4 billion rescinded by the Fiscal Responsibility Act. The plan was to trim another $10 billion out of the enforcement bucket in fiscal 2024, and again an additional $10 billion the next year.

Under the latest agreement from the Hill, the fiscal 2025 $10 billion would be accelerated, meaning all $20 billion would be clawed back this year. $6.1 billion would also be cut from the Biden administration’s “continued COVID-era slush funds,” the letter read, but Johnson acknowledged the final spending levels “will not satisfy everyone,” nor will the cuts go as far “as many of us would like.”

Senate Majority Leader Chuck Schumer (D-NY) and House Minority Leader Hakeem Jeffries (D-NY) said in a joint statement, as reported by Reuters, the discretionary funding not marked for defense would “protect key domestic priorities like veterans benefits, healthcare and nutrition assistance” from cuts.

“I’m encouraged that the Speaker and Democratic Leaders have identified a path toward completing FY 2024 appropriations,” Senate Minority Leader Mitch McConnell posted on social media platform X. “America faces serious national security challenges, and Congress must act quickly to deliver the full-year resources this moment requires.”

Vice President for Federal Tax Policy Chuck Marr took issue with the proposal, also commenting on X in a thread that “[c]utting IRS funding is a bad idea overall.”

“The IRS funding reduces wealthy tax cheating and raises revenue,” said Marr. “We’re already seeing great results. And remember: cutting IRS funding does not save money. It loses money. Lots of it. Congress should protect IRS funding to improve customer service and ensure wealthy taxpayers and corporations pay the taxes they legally owe, i.e. deliver what honest taxpayers deserve.”

The White House, however, gave its stamp of approval to the deal, which the president said “moves us one step closer to preventing a needless government shutdown and protecting important national priorities.”

The IRS did not immediately respond to Checkpoint’s request for comment on how the accelerated cuts would impact its objectives.


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