House Republican appropriators are proposing to cut funding to the IRS and eliminate a free online tax filing system that the Treasury Department recently made permanent and promised to expand to other states.
The House Appropriations Committee’s latest Financial Services and General Government (FSGG) bill “[prohibit] Funds used by the IRS to develop government-run tax return software not approved by Congress.”
In addition, the IRS budget for 2025 will be $10.1 billion, down $2.2 billion from the 2024 budget, with the enforcement budget in particular being cut by $2 billion.
Rep. Dave Joyce (R-Ohio), chairman of the FSGG subcommittee, said in a statement Monday that the bill “takes steps to prevent agencies like the IRS from unfairly targeting hard-working Americans.”
Democrats immediately denounced the IRS funding cuts.
“If they get the chance, Republicans will repeal the IRS’s new direct-file program before it expands across the country, depriving law-abiding taxpayers of the option to file their taxes for free,” Senate Finance Committee Chairman Ron Wyden, D-Ore., said in a statement Tuesday.
Rep. Rosa DeLauro (D-Conn.), the ranking member of the House Appropriations Committee, said Wednesday that the plan “contains approximately 80 new, problematic or nonsensical policy add-ons.”
The proposed budget cuts for the IRS follow an initial $80 billion funding increase for the agency passed as part of Democrats’ Inflation Reduction Act of 2022 (IRA), which Republicans have been chipping away at in the form of annual spending cuts.
Republicans and Democrats agreed to cut about $20 billion of the $80 billion in cash pumped into the government in the form of annual spending cuts last year as part of a deal to avert a default on U.S. debt.
Republicans secured a $275 million, or 2%, cut in funding for the IRS for fiscal year 2023.
The debt ceiling deal reached last June included an implicit agreement to immediately reduce IRA funds by $1.4 billion and then restore $10 billion each in fiscal years 2024 and 2025. The agreement was later updated to restore the full $20 billion by the end of the current fiscal year.
As of the end of last year, the IRS had spent only about 5.6% of total IRA funds. Just 1% of the enforcement budget, the IRS’s largest component and one that relies on the specialized hiring of experienced auditors, was allocated as of Dec. 31.
Republicans voted to eliminate the IRS’s free online filing program as soon as they took back the House last year, but the move was blocked by Democratic control of the Senate.
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