IRS Cuts May Come Early If New Spending Agreement is Approved

IRS In TROUBLE? It All Hinges On This


The Inflation Reduction Act of 2022, which gained bipartisan support, allocated an additional $80 billion to the IRS over the next ten years. This funding is earmarked for various purposes, including operations support, enforcement, taxpayer services, and the modernization of business systems. Despite the initial bipartisan backing, Republicans have been exploring avenues to revoke the allocated funds.

Efforts in the House to pass bills reducing funding for the agency have consistently faced setbacks. In the latest negotiations on the upcoming spending bill, there were adjustments that diminished the allocated funds. Nevertheless, not everyone is in agreement with the proposed deal.

Before January 19, Congress must approve four appropriation bills to prevent a government shutdown. Senate Majority Leader Chuck Schumer (D-NY) and Speaker of the House Mike Johnson (R-LA), along with other leaders, have recently engaged in negotiations to secure a spending deal and avert a partial government shutdown.

On Sunday, January 7, Johnson and Schumer disclosed that they had come to an agreement on a premium spending package totaling $1.66 trillion. Essentially, this maintains the spending limits at the levels established in the previous deal brokered by former Speaker Kevin McCarthy (R-CA). The updated negotiation incorporates a $10 billion reduction in IRS spending for fiscal 2024, amounting to a total cut of $20 billion. This adjustment accelerates the timeline by one year compared to the deal Democrats had reached with McCarthy.

On Sunday, Johnson communicated to lawmakers through a letter, outlining his success in attaining reductions for the IRS. This agreement marked a significant victory for Republicans, enabling them to eliminate one-fourth of the allocated $80 billion for the IRS. Janet Holtzblatt, former head of the Congressional Budget Office’s tax policy studies, expressed concern, stating that this deal paves the way for potential future cuts and is not favorable for the IRS.

Republicans are less focused on the well-being of the IRS and more concerned about what benefits the American people. Their primary worry is the perceived targeting of Conservatives by the IRS, and the implemented cuts are intended to put an end to such practices.

Despite Johnson successfully securing Democrats’ approval for substantial spending cuts, not all members of his party are satisfied. The House Freedom Caucus, known for ousting McCarthy over a nearly identical deal, released a statement on X, formerly Twitter, asserting that the new agreement was a complete failure.

Recent reports suggest that Conservatives are actively working on devising an alternative deal, asserting that the one announced by Johnson is no longer viable. According to Rep. Ralph Norman (R-SC), there are plans for a stopgap bill to prevent a government shutdown, as he holds the belief that the bill announced by Johnson will not progress.