Republican appropriators in the House of Representatives are proposing to scale back IRS funding and eliminate the free online tax filing system that the Treasury Department recently made permanent and has promised to expand to even more states.
The House Appropriations Committee's latest Financial Services and General Government (FSGG) bill promises “[prohibit] funds that will be used for the IRS to create government-run tax preparation software that Congress has not authorized.”
It also cuts 2025 IRS funding by $2.2 billion below fiscal year 2024 levels to $10.1 billion, specifically reducing enforcement funding by $2 billion.
FSGG Subcommittee Chairman Dave Joyce (R-Ohio) said in a statement Monday that the bill “takes steps to prevent agencies like the IRS from unfairly targeting hardworking Americans.”
Democrats immediately rejected the IRS cuts.
“If given the chance, Republicans will deprive law-abiding taxpayers of the choice to file their taxes for free with the IRS's new direct file program by shutting it down before it expands nationwide,” Senate Finance Committee Chairman Ron Wyden (D-Ore). .) said in a statement on Tuesday.
House Appropriations Committee member Rosa Delauro (D-Conn.) said Wednesday that the plan “includes approximately 80 new, problematic or pointless policy makers.”
The proposed cuts to the IRS follow an initial $80 billion funding increase for the agency passed as part of Democrats' 2022 Inflation Reduction Act (IRA), which Republicans have cut in the form of annual appropriations cuts .
Republicans and Democrats agreed to cut about $20 billion of the $80 billion in cash in the form of annual appropriations cuts last year, as part of the deal to avoid a default on U.S. debt.
For fiscal year 2023, Republicans have secured a $275 million (or 2 percent) cut in IRS funding.
The debt ceiling deal reached last June immediately cost $1.4 billion in IRA funding, with an unwritten agreement to take back $10 billion in fiscal 2024 and 2025. That agreement was later updated to recover the full $20 billion in the current budget year.
At the end of last year, the IRS had issued only about 5.6 percent of its total IRA funding. Only 1 percent of the enforcement budget – its largest component and dependent on the specialized recruitment of experienced auditors – had been allocated as of December 31.
Republicans voted to eliminate the IRS's free online filing program as soon as they retook the House of Representatives last year, a move that was blocked by Democratic control of the Senate.
